Ukraine

The war between the US, Israel and Iran has triggered an unprecedented global energy and commodities crisis, with the closure of the Strait of Hormuz – which normally handles about 35% of global seaborne crude oil trade and 20% of the world's liquefied natural gas (LNG) supply – driving the largest oil supply shock on record and pushing Brent crude prices above $114 a barrel by early May 2026. The World Bank warns that energy prices are projected to surge by 24% this year to their highest level since Russia's invasion of Ukraine in 2022, with overall commodity prices forecast to rise by 16%, driven by soaring energy and fertiliser costs and record-high prices for several key metals. The conflict has forced a dramatic rerouting of global trade, with about 170 container ships carrying an estimated 450 000 twenty-foot equivalent units of cargo stranded or delayed near Gulf shipping lanes, while shipping lines have introduced war-risk surcharges of about $1 500 per container. South Africa has not escaped the fuel price shocks, with the International Monetary Fund downgrading the country's 2026 growth outlook to only 1% from its pre-war projection of 1.4%, although the domestic fuel industry has proved relatively agile in shifting supply sources from the Gulf to the Atlantic Basin.

The aluminium market is heading for what Wood Mackenzie describes as an unprecedented crisis, with the global market facing a supply deficit of up to four-million metric tons this year after missile strikes damaged Emirates Global Aluminium's Al Taweelah plant and Aluminium Bahrain's facilities, while the continued closure of the Strait of Hormuz causes major logistical problems for Gulf producers that account for over a fifth of non-Chinese production. London Metal Exchange registered stocks have fallen by a third to 339 475 t since the start of the year, with the benchmark cash-to-three-months spread flipping into backwardation of $95.50 a ton – the tightest the market has been since 2007 – while physical premiums have surged, with the CME spot premium for Japan more than doubling to $316 a ton and the European duty-paid premium jumping by 58% since early March. CRU expects aluminium prices to reach $4 020 a ton in the third quarter of 2026 and peak at $4 105 in the second quarter of 2027, with the market deficit proving far more difficult to resolve than previous disruptions as idled smelter capacity in the US and Europe remains offline owing to high energy costs, while the closure of Mozambique's Mozal smelter in March owing to unaffordable power has compounded the supply hit.

Fertiliser prices are projected to increase by 31% in 2026, driven by a 60% jump in urea prices, with fertiliser affordability falling to its worst level since 2022, threatening to erode farmers' incomes and future crop yields, while the UN World Food Programme's analysis shows that if the conflict is more prolonged, these pressures on food supply and affordability could push up to 45-million more people into acute food insecurity this year. Independent Commodity Intelligence Services fertiliser analyst Chris Vlachopoulos warns that the global fertiliser market faces disruption to supply chains and costs on an unprecedented scale, with pressures expected to persist even if the Strait of Hormuz reopens and the conflict is resolved swiftly, as physical supply chains are expected to take considerable time to normalise, particularly for phosphates, where global availability was already tight before the latest Middle East conflict. Market participants caution that while fertiliser import prices may respond relatively quickly as geopolitical risk premiums linked to freight and insurance unwind, this would be unlikely to translate into a full normalisation of the value chain for a considerable time, with some suggesting that even if the conflict were to end immediately, disruptions to global fertiliser trade flows could continue until the end of this year and possibly even into the first quarter of 2027.

Asian LNG prices have rallied 75% from their pre-war level to $18.20 per million British thermal units, with prices rising in March to their highest level since December 2022, hitting $25.30, after Iran hit Qatar's Ras Laffan LNG facility, although this remains well below the record high of $70.50 per mmBtu in August 2022 after Russia's full-scale invasion of Ukraine. Uniper's chief executive for the Middle East, John Roper, warns that LNG prices could rise further in significant volatility if supply disruptions coalesce with hot weather in Asia and European storage refill needs, with the current supply disruptions hitting Asian countries excluding China harder than Europe so far, and the consequences expected to be felt until at least 2030 as the closure of the Strait of Hormuz and damage to facilities took most of the LNG supply growth from 2025 to 2026 off the market. Canada and Germany's state-owned energy firm SEFE have reached what Canada describes as its first LNG supply deal with a European buyer, outlining SEFE's intent to purchase one-million tons a year of LNG from the proposed Ksi Lisims export facility on British Columbia's Pacific coast, with deliveries potentially beginning in the early 2030s for a period of up to 20 years, underscoring efforts on both sides to diversify energy trade amid global market uncertainty.

South Africa's central bank governor Lesetja Kganyago has signalled a preference to raise interest rates sooner rather than later to tackle the coming wave of inflation from the Iran war shocks, warning that "by the time you decide to act, it might be too late" and pointing to the last inflation shock that followed the pandemic and Russia's invasion of Ukraine, when "central banks that responded late ended up having to respond more aggressively". Consumer inflation in South Africa slowed to 3% in February – hitting the central bank's target – from 3.5% in the previous month, but that slowdown came before the government raised petrol prices by the most in two decades, with Kganyago saying last month that higher energy costs may lift inflation to 4% in the near term, while fuel-price growth may accelerate to more than 18%. Citi's chief Africa economist David Cowan warns that Senegal, Mozambique and Malawi could default on their debts in the next two years, as governments reel from the impact of the Iran oil price shock on their finances and economies, with Senegal still in "a pretty big mess" and potentially heading into a default in 2027, while Malawi and Mozambique could default this year owing to steep weakening of their respective currencies, which could push their debt stocks and payments due on hard-currency lending into unsustainable territory.