Oil Jumps Amid Trump’s Escalation Warning

Oil rebounded sharply on Thursday, rising more than 5% after two days of declines, as US President Donald Trump threatened a further escalation of the war with Iran, injecting fresh uncertainty into energy markets

Energy – Oil Jumps After Trump’s War Escalation Threats

Oil rebounded sharply on Thursday, rising more than 5% after two days of declines, as US President Donald Trump threatened a further escalation of the war with Iran, injecting fresh uncertainty into energy markets.

Brent was trading above $107/bbl, while WTI was close to $106/bbl on Thursday morning following Trump’s address to the nation last night. The President said the US would hit Iran “extremely hard” over the next two to three weeks and could target “each and every one” of the country’s power plants. He also claimed the Strait of Hormuz would reopen “naturally” once the conflict ends, though he offered no details or a clear timeline. Trump additionally urged allies reliant on Middle Eastern energy to help resolve the near‑closure of Hormuz.

Even if shipping through the Strait of Hormuz resumes, a return to pre‑war market conditions is likely to be slow, as upstream production restarts, logistics normalisation and inventory rebuilding will take time.

US inventory data were mixed. EIA figures showed crude stocks rose for a sixth consecutive week, increasing by 5.5m barrels, below the 10.3m‑barrel build reported earlier by the API. Total crude inventories climbed to 461.6m barrels, the highest since June 2023 and close to the five‑year average. Cushing stocks rose by 520k barrels to 31.5m barrels, also the highest since July 2024. Crude imports were steady at 6.5m b/d, while exports increased by 199k b/d to 3.5m b/d.

In refined products, gasoline and distillate stocks fell by 0.6m barrels and 2.1m barrels, respectively, reflecting weak refinery runs despite rising implied demand amid heightened supply concerns. Refinery utilisation slipped 0.8ppt week-on-week to 92.1%.

Metals – Aluminium Rallies on More Gulf Smelter Halts

Aluminium prices rallied above $3,500/t on Thursday after reports that Emirates Global Aluminium (EGA) halted operations at its Al Taweelah smelter after the site was hit by Iranian missiles and drones over the weekend, according to Wood Mackenzie. According to the report, utilisation at Alba’s smelter has fallen to around 30%, from 81% previously. For now, these reports have not been confirmed by the companies.

If confirmed, a halt at EGA’s 1.6 mtpa Al Taweelah smelter, Alba’s reduced operations and earlier curtailments at Qatalum would take around 3 mtpa of capacity offline – close to half of Middle East aluminium production. That marks a sharp escalation from the roughly 8-9% disruption we were flagging in mid‑March.

This would imply materially deeper aluminium deficits across all our scenarios, lifting the severe disruption case to around 2-2.5 Mt, with even the base case now pointing to a deficit of roughly 1 Mt.

With Chinese supply capped, Indonesia’s ramping up constrained by power and limited capacity growth elsewhere, aluminium’s fundamentals remain firmly supportive. Prolonged Middle East disruptions add further tightening risk.

EGA has also reportedly moved to sell large volumes of alumina in the wake of the strike, according to a Bloomberg report.

LME aluminium prices are up around 17% year‑to‑date, with the forward curve in steep backwardation. That said, escalating global growth concerns could still lead to some demand destruction, partially offsetting the supply shock.

Aluminium, along with other base metals, pared earlier gains on Thursday morning after President Trump reiterated threats to attack Iran’s power plants, with rising rate risks renewing concerns over demand destruction.

Agriculture – Sugar Prices Ease on Weaker Demand Signals

sugar prices fell for a fourth consecutive session, briefly dipping towards US¢15/lb (-3% DoD), as softer oil prices reduced incentives for mills to divert output towards ethanol. While the front‑month contract is still up almost 12% over the past month – its strongest run since 2023, supported by crude’s earlier rally on Middle East tensions – recent hopes of de‑escalation have weighed on energy markets and, in turn, on sugar. Elevated volatility and uncertainty around the timing of any resolution have also encouraged position‑trimming. Meanwhile, favourable weather conditions in Brazil continue to support cane development, reinforcing expectations of ample supply in the upcoming season.

In India, data from the National Federation of Cooperative Sugar Factories show 2025/26 sugar production up 9% year-on-year to 27.1mt as of 31 March. The number of operating mills fell to 74, from 113 a year earlier, while cumulative cane crushing rose to 283.5mt, up from 265.5mt over the same period.

Disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user’s means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

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