Valerio Baselli: Hello and welcome to Morningstar. Global commodity markets have been under pressure amid rising trade tensions, US protectionism, and slowing global growth. To shed some light on what to expect from commodity markets in the second half of 2025, today I’m joined by Nitesh Shah, head of macroeconomic and commodity research at WisdomTree.
2025 Commodity Market Outlook: What Lies Ahead?
So, Nithesh, this year so far commodity markets had to face a world of high volatility, geopolitical risk and the unpredictable US trade policies. Generally speaking, what do you expect from the commodities’ space in the short-medium term?
Nitesh Shah: Yeah. So, in this year of the snake, there’s been no shortage of shocks to the commodity markets. Commodity markets have weathered all of these shocks really well. Commodity prices as a broad group are up particularly precious metals, which have kind of benefited from all those geopolitical and trade policy uncertainties. But then even other metals like base metals have actually risen, in part because, prices of say, US traded, commodities like Comex copper, or the aluminum that’s traded in the US have risen in anticipation or the implementation of those tariffs. Oil markets have also been quite volatile, because of geopolitical risks, but there is a little bit of downside pressure.
So that’s somewhat taken off some of the upside from the broader commodity group. Now, over the next few months, I do thinkthere’ll be a little bit more range trading while we wait for more certainty over the state of tariffs. We should have the reciprocal tariffs known within just over a week. But then the sectoral tariff says more question marks than ever. We’re still waiting for the section 232 investigation on critical minerals, which should give us a bit more answers over the state of tariffs on a range of other metals. And that could potentially drive the direction of some metal prices. And we could see a repeat of what we sawin the copper and aluminum markets. If other metals like tin or nickel do come under tariff pressure.
Oil Price Forecast: Where Is Brent Headed Next?
Baselli: Let’s talk about the energy sector. What are your expectations for oil prices over the next 6–12 months, especially in light of ongoing OPEC+ decisions and geopolitical tensions?
Shah: So, to put a bit of context, OPEC have three layers of production restraint and they’re rapidly unwinding the final layer of production restraint that was implemented that remains to about 2.2 million barrels per day. And they’re unwinding it way ahead of schedule. That was supposed to unwind it by September of next year, and they look like they’d be ready to fully unwind it by September of this year. Then into the second layer of restrictions amounting to about 1.65 million barrels per day. I think OPEC will have the earliest opportunity to start discussing the unwind of that in its November meeting when you’ve got both OPEC and non-OPEC country ministerial meeting, so that could also add more barrels to the market later on this year. But there may be some air pocket between September and November, where there’s no new announcements of extra barrels coming to the market. Demand overall remains relatively weak on the structural basis, although seasonally, in the summer months we’ve got some nice strong demand which may be masking some of that weakness. But overall, I think oil prices, in Brant terms, will trade between $60 to $70 per barrel, over the coming 6 to 12 months, which is notably lower than what we saw last year where the base was close to that $70 to $80 range.
How the Ukraine War Reshaped Global Natural Gas Trade
Baselli: What role is US LNG playing in shaping global natural gas markets post-Ukraine war and how might that evolve, in your view?
Shah: Yeah, so the Ukraine Russia war had really changed the global gas markets, with Europe being so heavily reliant on Russian pipeline flows and that having closed off, Europe is now importing liquefied natural gas (LNG) from a number of different sources around the world. And the US, being a surplus producer of natural gas, has been very keen to export it out into the European markets. However, LNG requires some infrastructure to be built out. So, the US needs to continue to increase its infrastructure built out of, of liquefaction, of its natural gas. And Europe needs to continue to build its infrastructure of regasification to be able to import in sufficient volumes, to be fully able to reduce its reliance its LNG over to Europe.
So, by pipeline gas flows have closed off largely. It’s still exporting its LNG and U.S. will be able to replace it over time, but we do need a little bit more infrastructure to be put into place. At the moment, Asian demand is also looking a little bit weak with China in particular having electrified at a rapid rate, reducing its reliance on some of these traditional hydrocarbons.
Is Gold Still a Buy After 2024 Rally?
Baselli: Interesting. We could say that 2025 has been the year of metals, given the great performance of gold, silver, platinum, and palladium. What are your expectations for metals in the coming months?
Shah: Yeah. You’re right. So gold, silver, platinum, palladium. They have been the star performance of the commodity complex. It started off with gold really being the beneficiary of all the geopolitical and trade, uncertainty. But he’s been overtaken by all the other metals now, with platinum and palladium, being the most recent to actually rally and rally strongly. And part of the, the strong rally has just been the recognition that both of those metals are in a supply deficit. But beyond that, there are worries that it could get caught up in, in this so-called trade war. And U.S. could be, implementing tariffs on these industrial, imports of those metals. So, you know, after this very rapid rise in prices, we don’t expect the second half to be as strong in terms of performance. But we do expect gold to start to regain some of its relative lost ground from the other, the other metals, because we still haven’t really escaped from geopolitical or trade uncertainties.
In particular on the geopolitical front, President Trump has been unhappy with the progress on ending the Ukraine war and is likely to implement a fresh dose of sanctions on Russia, which could inspire more, buying of gold. And also, the Iran situation hasn’t been resolved, and we could find, the, you know, more, upset in geopolitical situation in the Middle East. And that would also play into Gold’s favor. And lastly, with the rising indebtedness, especially with unfunded tax cuts, we could see a lot more demand for gold as being that’s alternative to traditional assets, which, you know, which usually favors gold, when you see rising indebtedness.
Top 3 Commodities to Invest in Now
Baselli: To conclude, if you had to name three commodities to invest in today, which would they be and why?
Shah: Yeah, I would say, gold, at the top of the list, but also copper and aluminum, there is a little air pocket right now where inventories of copper and aluminum in the US, which were brought in before the tariffs, which were implemented, they’ll be run down. So, there may be a little bit of a weak patch in demand for the very short term, but one says there’s a run down. I do expect the prices and demand for those to accelerate, as there’s so much need for those to base metals in energy transition and data center buildout, where those two metals are heavily used.
Baselli: Thank you so much for your time, Nitesh. For Morningstar, I’m Valerio Baselli, thanks for watching.
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