According to a Fitch Ratings report, a renewed emphasis on geopolitical and political risks in commodities markets, citing conflicts in the Middle East and Ukraine, upcoming elections in various countries, and increasing regulatory uncertainty in certain jurisdictions.

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Geopolitical price premium expected to persist

The report anticipates that the geopolitical price premium will persist for most commodities, including oil and gas, copper, and defensive commodities such as gold. However, it notes that faltering economic growth, coupled with significant spare oil capacity, will limit the extent of price increases.

Weakening global demand growth forecast

In 2024, Fitch Ratings predicts a weakening in global demand growth across various commodities, including oil, copper, and aluminum. This forecast is attributed to subdued global economic growth, particularly with China’s GDP growth forecasted to be less than 5%, as the country’s property market grapples with stabilization issues.

Supply response key to market balance

The report emphasizes that the supply response, including production interruptions, will play a crucial role in determining market balance amid changing demand dynamics.

Oil market buffer 

Fitch Ratings highlights the significant spare capacity within the OPEC+ alliance, exceeding 5 million barrels of oil per day, which serves as a substantial buffer to mitigate disruptions in the oil market. Additionally, the European gas market is described as remaining comfortably supplied.

Global LNG supplies

Despite the temporary pause in approvals for US liquefied natural gas (LNG) export facilities, Fitch Ratings does not foresee a significant impact on global LNG supplies in 2024.

Challenges in global copper supply

The suspension of operations at the Cobre Panama mine, following a ruling by Panama’s Supreme Court deeming a law on the mine’s new concession agreement unconstitutional, is expected to affect global copper supply. This decision impacts operations with First Quantum Minerals Ltd. (B+/Rating Watch Negative).

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