Oil and gas prices continue to rise in the second week of the conflict as Iran attacks ships in the Strait of Hormuz and concerns grow over Red Sea shipping. The European Union shows no interest in joining the U.S.’s loosening of Russian fuel sanctions. As for Chile, the country inaugurated a new government this week, which could impact global copper and lithium prices. Disruption in international energy markets brings opportunities for supply chain professionals who can find creative solutions. Qorvis intelligence experts around the globe share their insights.
Geopolitics drive a new era of volatility
Brad Klapper, Chief Intelligence Officer, Washington, D.C.
We have entered a period of extreme volatility in commodities markets. Players lack information. They can’t forecast how long the Strait of Hormuz will be closed, how long the war will go on, and what the off-ramp is. They are struggling with price discovery and predictability. Volatility could worsen.
The Red Sea could serve as the next flashpoint in this war as Saudi Arabia ramps up oil exports via its western coast to avoid Hormuz. Supplies will have to navigate the Bab-el-Mandeb straight off Yemen or be transferred to smaller vessels to pass through the Suez Canal. The Iran-backed Houthis can threaten both routes.
What is remarkable is how victory will now be assessed. In the first days, it focused on whether the U.S. could engineer a true “regime change” as well as extinguishing Iran’s nuclear and missile threat. Two weeks on, restoring freedom of navigation is central in the public debate. Hormuz must become safe and navigable.
Watch Brad’s full video insight here as he walks through the impact of the war on energy prices and global commodities markets.
European Union holds firm on Russian energy sanctions
Dan Rocha, Partner, Brussels
The European Union shows no appetite for sanctions relief for Russian energy, despite the dramatic volatility in gas prices resulting from the Hormuz disruption. The EU is moving forward with its plans to fully phase out Russian fossil fuels, including natural gas.
European natural gas futures reached €52/MWh on Thursday, up about 60% since the start of the month, but the timing is important. With spring underway, European gas demand is seasonally lower.
European policymakers have been particularly cautious when addressing energy prices in relation to the escalation in the Middle East, but the message has been relatively consistent: there’s no reason to panic. The European Commission, in particular, has repeatedly emphasized that Europe is in a stronger position to respond to an energy crisis, precisely because of the policies implemented after the 2022 supply shock.
Chile’s energy sector is under new leadership
Maria José Abad, Chief Operating Officer, Washington, D.C.
This week, Chile’s new President José Antonio Kast was sworn in, and people should watch Chile’s energy market closely, because it sits at the center of the global energy transition. Chile is the world’s largest copper producer and one of the biggest suppliers of lithium, two metals essential for electric vehicles, batteries, and power grids.
The new Chilean Energy Minister Ximena Rincón is expected to focus on strengthening grid resilience and addressing rising electricity prices. Those policy decisions will matter globally because Chile’s mining sector, renewable expansion, and power infrastructure are all tightly linked to global commodity supply chains.
Notably, Kast attended the recent Shield of the Americas Summit in Florida on March 7, at the invitation of President Trump. Additionally, Deputy Secretary of State Christopher Landau attended Kast’s inauguration, signaling U.S. interest in the new Chilean government.
Watch Maria’s full video insight here.
Traders navigate rising risk in global energy supply
Benoît Lioud, Managing Director, Geneva
The present Middle East turmoil is exposing weaknesses in the global supply of energy and creating opportunities for those who can effectively manage the crisis and mitigate the residual impacts of shock disruptions.
Supply chain professionals are already working to get a handle on the short- and medium-term effects on the global economy in general and the commodities sector in particular. Transportation costs – especially insurance – will continue to rise while security risks on traditional trade routes escalate. Operators are increasingly turning to safer, albeit more costly, alternatives and rethinking logistics infrastructure. This is creating an incentive for broader investment in storage and transport infrastructure, to make operators more resilient to such disruptions going forward.
In the long run, this crisis has the potential to accelerate two shifts: a wider scope for renewable energy and the diversification of supply, reducing reliance on Middle Eastern oil. New energy partnerships – particularly with African and Latin American producers – are emerging, as consuming nations seek supply security and producers aim to maximize the value of their resources. However, the structure and organization of markets have changed profoundly since the era of major bilateral agreements. Today, optimization, risk management, flexibility, and access to financing are the bedrock of these partnerships and are where commodity traders provide value by ensuring the reliability of supply.
Watch Benoît’s video insight here as he explains how commodities traders are coping with the extreme instability of the war.
Russian oil gains little from Middle East disruptions
Maryam Isgandarova, Policy Analyst, Brussels
Right now, we are seeing that Russian oil production has not materially increased despite the escalation in the Middle East. While supply disruptions in the region have tightened global markets and pushed prices upward, Russia has not significantly expanded crude flows.
At the same time, Europe is not discussing any easing of sanctions on Russian energy, and the disruptions in global oil markets have not yet prompted EU policymakers to reconsider their current approach.
If Russia is going to benefit from supply disruptions in the Middle East, the main buyers remain in Asia. In particular, India has sharply increased purchases of Russian crude, reinforcing its role as one of the most important destinations for redirected Russian flows.
The key takeaway is that the crisis in the Middle East may be supporting global oil prices, but Russia’s ability to capitalize on the disruption remains limited. At the same time, Russian oil flows continue to shift toward Asian markets.
