Oil and Precious Metals Price Projections Adjusted Post Conflict but Volatility a Big Risk for Now

What You Need to Know:

• Oil forecasts rose on war-driven supply disruption and geopolitical risk.
• Markets stay tight, with slower output recovery and falling inventories.
• Brent could average US$104/b, with upside above US$150/b.
• Base metals were upgraded, led by aluminum. Copper upside looks capped.
• Gold is weaker near term, but silver and PGMs were upgraded.
• Longer term, precious metals strengthen on lower rates, a weaker dollar, and stronger demand.

We have materially lifted both short- and long-term price projections for crude oil and petroleum products due to the ongoing supply disruptions associated with the Iran war and the high level of geopolitical risk premium that will continue.

Supply Disruptions Keeping Oil Markets Tight

Middle East production will likely not return to pre-war levels until October or November 2026 at the earliest. Lengthening logistical time lags prevent a speedy return to a balanced market. Global inventories are expected to plunge by another 800 million barrels, even if a deal is reached, stressing and incapacitating parts of the global petroleum supply chain. As such, we see Brent Crude averaging US$104/b in the second half of the year, with a risk of prices spiking above $150/b due to regional scarcities.

Base Metals Outlook Mixed as Conflict Tightens Supply

Aluminium, copper and nickel have also been upgraded amid the ongoing conflict, which has sharply reduced critical inputs required for smelting and increased costs across the board. The massive aluminium deficits could drive prices above recent records as inventories collapse. Meanwhile, copper is unlikely to see much upside due to the increased likelihood that surpluses associated with weaker demand and returning capacity will emerge over the next two years.

Gold Soft in Near-Term, Strength Longer-Term Across Precious Metals

Our gold price projections for the next two quarters have been downgraded materially. Higher inflation expectations associated with the negative supply shocks have pushed yields across the curve higher, kept the USD firm and prompted markets to begin pricing in a Fed hike in late 2026. If crude oil prices surge from current sub-$100/b levels, gold may trade down to support in the $4,000–$4,200/oz range. While facing the same correction risks, silver and Platinum Group Metals (PGM) forecasts have been upgraded over the same period.

In sharp contrast to our short-term view, our long-term gold projections have been lifted materially higher as we expect inflation pressures to ease after the Iran war concludes. This event will allow interest rates to move lower, the dollar to weaken and investors to once again talk about the debasement trade. Fear of financial repression, elevated geopolitical risks and firmer investor and central bank buying could see gold trade above our Q2 2027 average of $5,350/oz.

The long-term silver and PGM outlook is upgraded due to gold's strength and an improving economy. Both silver and platinum are likely to see deficits as supply remains weak and investor and industrial demand following the Persian Gulf conflict shifts higher.

Expected Production Profile if Recovery Starts Now

Dropping Real Fed Funds Rates Are Typically Positive for Precious Metals