Why Oil Prices Are Surging Despite Recovering Supply

Geopolitical tensions in the Middle East are driving significant volatility across global energy and commodity markets. Daan Struyven, Co-Head of Global Commodities Research at Goldman Sachs, notes that crude oil prices currently include a $27 per barrel risk premium due to threats against shipping and infrastructure. While crude flows have rebounded, refined products like diesel remain structurally tight, forcing refiners to prioritize high-margin output and subsequently pushing gasoline prices higher. Elevated freight rates further exacerbate regional price disparities, particularly in Asia. European natural gas faces substantial upside risk, with prices potentially reaching triple digits if winter demand spikes amidst low LNG exports. Beyond energy, copper markets are tightening due to intense U.S.-China competition for limited supply, while gold maintains resilience as a hedge, supported by sustained central bank purchasing despite a high-interest-rate environment.