The Commodities Feed: Middle East Re-Escalation Sends Oil Higher

After yesterday's sell-off, oil prices have partially recovered in early morning trading amid re-escalation between the US and Iran, casting doubts on whether any peace deal might be imminent

Energy- Chinese oil imports collapse

The oil market sold off heavily yesterday, with WTI settling 3.4% lower on the day and crucially below $90/bbl. Brent didn’t fare any better, closing just shy of 3% lower. This weakness came amid renewed hopes of an imminent deal between the US and Iran, following both Israel and Iran calling an end to the strikes over the weekend. Clearly, developments overnight show that the situation remains highly volatile. The US resumed strikes on Iran following the downing of one of its helicopters in the region; Iran responded by saying that its forces “will leave no attack or threat unanswered.”

This once again demonstrates the difficulty Iran and the US face in working towards a sustainable ceasefire that allows for the free flow of vessels through the Strait of Hormuz. Therefore, the price action in early-morning trading today is fairly underwhelming, with the market up just over 1% at the time of writing. Participants continue to sit on the sidelines, given the market's fluidity, uncertainty, and headline-driven nature. This is reflected in the aggregate open interest in ICE Brent, which has continued to trend lower and stands at its lowest level since August 2025.

With no imminent deal in sight and with the global oil market tightening significantly every day, we see upside to prices, particularly if these disruptions linger into the third quarter, a period of seasonally stronger oil demand.

Chinese trade data also added downward pressure to the market yesterday, confirming that China’s oil imports dropped sharply in May as supply disruptions persisted. Crude oil imports in May fell 3.2m b/d year-on-year to 7.8m b/d, the lowest level since October 2017. This highlights China’s ability to help rebalance the global market. The key question moving forward is how sustainable this drop is and how willing China would be to draw down inventories. The key upside risk is a scenario in which China re‑enters the market more aggressively.

The latest data from the American Petroleum Institute (API) continues to show a tightening in the US oil market. Crude oil inventories are estimated to have fallen by 9.1m barrels over the last week, while gasoline inventories fell by 1.2m barrels. The more widely followed weekly EIA report will be released later today.

Metals- China trade data

China’s latest trade data show mixed signals. Unwrought copper imports rose 4.4% YoY to 445.7kt in May, though year-to-date volumes remained down 7% YoY at 2.01mt. This reflects higher domestic refined output. Copper concentrate imports fell 1% YoY in May (2.36mt), with YTD volumes down 1.4%. In ferrous markets, iron ore imports declined 0.4% YoY and 5.9% MoM to 97.7mt. But YTD flows remain up 6.3%, supported by infrastructure and manufacturing activity despite weak real estate demand.

On the export side, shipments of unwrought aluminium and products rose 15.5% YoY to 632.4kt. This is the highest since November 2024, as producers responded to stronger overseas demand following supply disruptions from the Middle East. Steel exports fell 2.2% YoY to 10.3mt in May, leaving y-t-d exports down 8.1%.

Positioning was mixed across base metals. CFTC data show copper net longs fell by 5,761 lots to 63,001 after five weeks of increases. Aluminium net longs rose by 4,874 lots to 85,964, driven by a sharper drop in both long and short positions. Zinc net longs edged higher by 594 lots to 38,075 after two weeks of decline.

Agriculture– China soybean imports jump

Chinese trade data shows that soybean imports increased by 39% month-on-month to 11.8mt in May, the highest since September 2025. However, this is still down 15% YoY. The increase was mainly driven by robust South American supplies, particularly from Brazil, as well as faster customs clearance and improved port logistics. Cumulative soybean imports over the first five months of the year stand at 36.94mt, down 0.4% YoY.

Ukraine’s Deputy Minister expects grain and legume exports to reach approximately 37mt in the 2025/26 season (ending 30 June 2026), below the previous season. The decline reflects ongoing disruptions to port and logistics infrastructure due to the war. As a result, an additional 6–7mt of grain stock is projected to be carried into the 2026/27 season.