Commodity Price Watch: March 2026

The outbreak of the war in the Middle East at the end of February and beginning of March turned a relatively sedate 2026 outlook into one fraught with uncertainty.

As a general statement, energy prices are now strongly higher. Chemicals are heavily dependent on oil and gas so also see upward revision. Aluminum is strongly impacted because of supply disruption, while steel is moderately affected and copper only indirectly through demand implications. The longer the duration of the war, the greater the exhaustion of existing inventory and thus much greater supply and price consequences. The war has taken attention away from protectionism, but the issue has not gone away.

As measured by the Materials Price Index (MPI) by S&P Global Market Intelligence, industrial materials prices bottomed in the second quarter of 2025 and will revisit those levels in the second quarter of this year. For the fourth quarter of 2025, the MPI was 5% below its year-earlier level. Prices are returning to year-earlier levels, however, as the MPI for the second quarter of 2026 is forecast to be 0.4% below the previous year.

Regionality rather than global is a commodity market feature that has grown in recent years, and the war will exacerbate the trend. Regions self-sufficient in energy — particularly oil and gas — will have less direct impact while importers will face higher energy costs and thus dampened demand in other parts of the economy.

War in the Middle East sent oil prices soaring. The eventual price trajectory will depend on the length of time that little to no traffic passes the Strait of Hormuz. The base case presented here assumes about two weeks of near closure of the strait. Daily Brent crude pricing has already exceeded $100/barrel, but once traffic resumes in the strait, the price will come down slightly

Infrastructure damage will mean that even when traffic resumes in the strait, 1 million to 2 million barrels/day of production will remain offline through the end of the second quarter. Risk remains high. This timeline is just one of many possibilities, and if the Strait of Hormuz sees little traffic for months rather than weeks, prices could go well above $100/b.

Gasoline and diesel prices will jump in line with oil. Gasoline prices average just below 400 cents per gallon for the second and third quarters — kept elevated by seasonal factors despite crude declining, meaning our advice for the second quarter is to buy as needed. Diesel prices will decline in the third quarter.

US natural gas is the only major energy commodity with virtually no upward pricing pressure from the war in the Middle East. Export growth continues to lead pricing gains, but global LNG prices were already such that the US was exporting as much as it could. 

There is a broad-based increase in the short-term pricing outlook across the board. The war has caused substantially higher feedstock cost pressures, as well as global supply disruptions. The biggest increases are being seen in the Asia region, followed by Europe and then North America.

Still, there is nowhere to run or hide, as higher spot pricing is being seen globally. Price rises across petrochemicals in the first half of 2026 will be broad, mirroring crude oil and natural gas increases.

Steel prices are higher in the US and Europe while little changed in most of Asia. The US has very little direct impact from the war but disruption to shipping is expected to restrict imports. US mills will not lower prices until imports undercut domestic market power.

European electric furnace steelmaking is strongly exposed to electricity prices. The loss of natural gas from the Gulf will cause higher electricity prices that will be partially passed on to steel pricing. Weak demand will prevent the full pass-through of higher input costs.

Mainland Chinese prices will be mostly flat as output exceeds consumption while global trade in steel is underwhelming. Supply disruption is unlikely but may occur if war-related shipping issues arise, or if temporary energy shortages curtail production.

Demand will be flat to negative in Europe, the United States and mainland China. Demand was already forecast as flat at best, and the war will undercut even more. East Asia and India do grow, but they are dependent on Middle East oil and gas supply so the longer the war, the weaker the outlook.

Prices for aluminum and copper have been revised up through the middle of 2026 because of the ongoing war in the Middle East.

Aluminum prices are elevated on a tight market, which is further constricted by the reduction of smelting capacity because of the conflict with Iran. Higher costs, mainly due to elevated electricity costs, will also feed into prices to bring a significant spike over the first and second quarters of 2026.

Copper prices continue to be driven by short-term effects, even as fundamentals become balanced and a small surplus develops. The return of mainland Chinese investors from the Lunar New Year holiday brought increased speculation, but reduced activity from both industrial and financial buyers has seen prices come under pressure, despite pronounced volatility in the downward trend. However, this has been upended by the start of the war in the Middle East, with increased risk and higher costs feeding into prices.

Although prices are higher, they have recently risen more sharply in response to more modest developments. Price rises may be subdued as companies assess developments, and so there is increased risk that prices may spike upward more than forecast.

--With contributions from Keyla Goodno and Emiliano Pérez