Macro Voices

MacroVoices #529 Ole S Hansen: Commodities in The Wake of The Iran Crisis

1h 13min

Ole Hansen discusses the profound and underappreciated impact of the Iran crisis on global commodity markets, extending beyond crude oil to refined products, fertilizers, and metals. He highlights extreme backwardation in energy as a powerful tailwind for investors and warns of potential food inflation due to fertilizer shortages. Hansen argues that this crisis reinforces a long-term secular inflation trend, favoring hard assets and potentially extending the current commodity supercycle.

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✨ Key Takeaways

1

The Iran conflict's disruption extends far beyond crude oil, affecting refined products, petrochemicals, fertilizers, and even sulfuric acid crucial for copper mining, indicating a systemic shock to energy-intensive commodities.
2

The current steep backwardation in crude oil futures (e.g., December Brent at $80 vs. front-month in the $90s) offers significant positive roll yield, making long positions in deferred contracts attractive even if spot prices remain flat.
3

Fertilizer shortages, exacerbated by the Middle East crisis and high gas prices, could lead to diminished crop yields and drive the next leg of commodity inflation in the second half of 2026 and into 2027.
4

The shift from 'just in time' to 'just in case' global supply chains, coupled with ongoing geopolitical instability, strengthens the long-term case for investing in hard assets like commodities to hedge against persistent inflation.
5

Eric Townsend emphasizes that a continued US blockade of Iranian oil exports could force production shut-ins, leading to a disruption lasting not just weeks, but potentially six to twelve months, with severe global economic consequences.

💬 Notable Quotes

"This disruption we're seeing right now is just so profound because it's not only the energy space that we are seeing being impacted... But it's also the associated impacts because I think many would probably not aware how the importance of the Middle East besides energy production."
"You can actually lose money being long in an up market and you can make money by being long in a down market depending on what's going on with the term structure."
"If we do get a deal, what we're left with is the fact that higher prices will be higher going forward and that should be benefiting the earnings. So again, the energy sector and all the producers are also the sector which I think will benefit in the future."