Commodity Price Watch: June 2026

The ongoing conflict is projected to keep commodity prices elevated long-term, even after hostilities cease. The Materials Price Index (MPI) by S&P Global Market Intelligence is forecast to surge almost 35% by the third quarter of 2026 from the end of 2025.

While prices are expected to soften in late 2026 and 2027, they will remain significantly higher than 2025 levels through 2028 due to inventory rebuilding, infrastructure repair, and persistent supply chain risks.

The duration of the conflict is creating a "higher for longer" price trajectory. The time needed to repair physical infrastructure, rebuild inventories, and normalize shipping routes like the Strait of Hormuz means that market impacts will persist well beyond the end of active hostilities. This extended period of high costs affects global supply chains, with risks of shortages in critical materials like helium and sulfur if disruptions continue.

Prolonged Impact of Middle East Conflict

The war in the Middle East continues to push commodity costs higher, and the duration is creating a trajectory of higher for longer, even if the war ended tomorrow. Time will be required to rebuild inventory, reposition stranded ships and cargos, and convince the market that hostilities will not flare up again. Physical damage to energy infrastructure, refineries and facilities such as aluminum smelters will require months or longer to repair. Many transaction costs such as ship insurance will be higher on an extended basis.

We assume an end to hostilities and gradual resumption of normal traffic in the Strait of Hormuz over the summer. A combination of a downturn in energy costs and softening of demand leads prices to decline over the second half of the year, but even by 2028 most prices are higher than at the end of 2025.

Materials Price Index Forecast

The Materials Price Index (MPI) by S&P Global Market Intelligence will surge almost 35% between the end of 2025 and the third quarter of 2026. From the fourth quarter of 2026 to the fourth quarter of 2027, prices will subside but still be above fourth-quarter 2025 levels. Looking to 2028, the fourth quarter will decline but remain above the fourth quarter of 2025 — as said, higher for longer.

Risk of Shortages and Upside Price Risk

If the strait remains effectively closed into the second half of the year, then the possibility of shortages grows more worrisome. Oil and gas are the most obvious, but helium (needed for microprocessor manufacturing), sulfur (needed for fertilizer, copper refining, nickel refining and more), and aluminum eventually run out of inventory or into steep demand destruction. These shortages are not the base scenario but do point out that price risk is to the upside.

In contrast, steel is largely unaffected except through higher transportation costs, although there is some loss of slab exports, and downward price pressure from weaker demand.

Direct vs. Indirect Commodity Disruption

Some commodities are suffering direct disruption while others are indirect. The most obvious impacts are on crude oil and refined products and on natural gas. But direct supply disruption also hits chemicals and plastics and nonferrous metals including copper, aluminum and nickel. In building materials, plastics and asphalt are directly impacted but lumber is not.

By region, Asia is most hit on the cost side but also faces the greatest eventual demand destruction. Any spending on energy and food cannot be spent on appliances or restaurants or even infrastructure investment.

The outlook for key commodities is as follows:

• Aluminum: Supply will remain restrained until output from Gulf Cooperation Council (GCC) smelters recovers from a month-over-month drop in April. Gradual capacity increases from Southeast Asia will offer only partial relief.
• Chemicals: While the forecast peak is less aggressive than previously thought, buyers will still face significantly higher pricing compared with 2025 levels throughout 2026 and into 2027.
• Steel: Prices are expected to peak in the second quarter in most regions before declining in the second half of 2026 due to weaker demand and retreating costs. The US price peak is expected later, in the third quarter.
• Oil: Despite recent prices being lower than expected, Brent crude is forecast to remain above $100/barrel into 2028 due to inventory declines, infrastructure damage, and ongoing supply chain risks.

What is the overall forecast for commodity prices? The Materials Price Index (MPI) is projected to surge almost 35% between the end of 2025 and the third quarter of 2026. After a partial decline, prices in the fourth quarter of 2028 are forecast to be higher than at the end of 2025.

How long will the price impact of the conflict last? We expect a "higher for longer" trajectory. Even with a gradual resumption of normal traffic in the Strait of Hormuz, prices across most commodities are expected to be higher in 2028 than they were at the end of 2025.

Which commodities are most affected by the conflict? Direct impacts are hitting crude oil, refined products, natural gas, chemicals, plastics, and nonferrous metals like copper, aluminum, and nickel. Steel is indirectly affected by higher transportation costs, while lumber is not directly impacted.

What is the forecast for oil prices? The analysis assumes Brent crude oil will remain above $100/barrel into 2028. This is due to the scale of inventory decline, damage to production facilities, and ongoing risks to supply chains.

—With contributions from Emiliano Pérez