- Jimmy Jean, Vice-President, Chief Economist and Strategist
Marc-Antoine Dumont, Senior Economist • Florence Jean-Jacobs, Principal Economist
Commodity Trends
An Uncertain Future Still Looms Over the Conflict in Iran
August 11, 2026
Highlights
- The situation in the Middle East remains volatile and continues to support a risk premium in oil prices. New negotiations are underway, but given the events of recent months, the durability of any new agreement is open to question. Against this backdrop, the reopening of the Strait of Hormuz is likely to be even more gradual than previously anticipated, implying a lower level of supply in the global oil market for a longer period. We continue to forecast a year-end price of US$75 per barrel for West Texas Intermediate (WTI).
- In Western countries, the oil supply response to the conflict in Iran has remained cautious. In fact, major producers have maximized output from existing facilities while maintaining considerable discipline in their growth plans. The prevailing view remains that prices will eventually decline and that Middle Eastern production will return to global markets. As a result, significant investments in new production capacity are unlikely. This is clearly illustrated by the Dallas Fed Energy Survey, which found that 69% of large producers do not plan to increase production in response to the conflict. Smaller producers, however, have taken a more opportunistic approach, with 57% indicating support for higher output.
- Metal prices have generally evolved in line with our expectations. Demand for copper, nickel and aluminum remains resilient despite higher energy costs. Aluminum prices have nevertheless retreated after recently reaching a peak due to production disruptions in the Middle East. Iron ore prices have also continued to decline, as abundant supply continues to exert downward pressure on the market.
- Gold, meanwhile, has recovered part of its recent losses and is currently trading near US$4,350 per ounce. This rebound has been supported by inflation concerns related to the ongoing conflict in Iran, as well as by the accommodative tone adopted by the Federal Reserve despite inflation remaining above target. The price of the yellow metal is expected to continue its gradual ascent over the coming months, reaching approximately US$4,500 per ounce by year-end.
- North American lumber prices rebounded in June and July, returning to levels seen a year ago. In Canadian-dollar terms, the increase has been amplified by the depreciation of the loonie. This improvement primarily reflects supply-side adjustments, as producers have reduced operating rates to align output with still-moderate demand. In the United States, elevated mortgage rates continue to weigh on residential construction. Pulp and paper prices have also moved higher, breaking nearly three years of stagnation. The threat of 50% US tariffs on Canadian paper and paperboard remains a significant risk to the sector’s profitability.
- Prices for major grain crops have risen since late June, and the outlook ranges from stable to modestly favourable. Drought conditions in Europe are supporting corn prices, although this effect is being partly offset by favourable growing conditions across the Americas. Wheat prices have been volatile amid an intensification of the conflict between Ukraine and Russia, while soybeans continue to benefit from strong Chinese demand. Nitrogen fertilizer prices have fallen from their April peak, but supply risks persist due to the still-unstable situation in the Middle East.
Commodity Prices
