Shifting Focus: Tariffs Gain Importance Amid Middle East De-escalation

In the wake of a fragile ceasefire between Israel and Iran, the global commodities market is witnessing a renewed emphasis on tariffs and trade agreements. As tensions in the Middle East appear to stabilize, analysts are concerned that the focus will shift towards economic policies, particularly those involving tariffs on key commodities such as oil, copper, and cocoa.

According to Warren Patterson, Head of Commodities Strategy at ING, the current geopolitical climate significantly influences market dynamics. "With the ceasefire holding, we expect the market to pivot towards tariff impacts and trade negotiations that could reshape supply chains and pricing structures," Patterson stated in a report published on June 27, 2025.

The de-escalation in the Middle East has led to steadiness in oil prices, which were previously forecasted to be volatile due to potential disruptions. The U.S. Secretary of Commerce, Howard Lutnick, confirmed that the U.S. and China finalized a trade agreement, aimed at stabilizing economic relations ahead of a reciprocal tariff deadline of July 9, 2025. This agreement is expected to alleviate some market tensions, as it involves major trading partners and could pave the way for further negotiations, including those with the European Union and other significant economies.

In the oil sector, the Organization of the Petroleum Exporting Countries (OPEC+) is set to meet on July 6, 2025, to decide on production levels for August. Analysts predict that OPEC+ will continue to unwind supply cuts, potentially increasing oil production by 411,000 barrels per day. This increase could lead to a surplus in the oil market towards the year's end, provided that tensions in the Middle East do not escalate again.

Meanwhile, the metals market is also feeling the ripple effects of tariff discussions. Copper prices spiked recently, driven by a combination of reduced LME stockpiles and speculation regarding U.S. tariffs on imports. The London Metal Exchange (LME) reported that cash contracts for copper were trading at a premium due to tight supply conditions, exacerbated by an 80% decline in on-warrant holdings this year, as traders rush to secure inventory ahead of potential tariff implementations. According to Ewa Manthey, Commodities Strategist at ING, "The current tightness in the copper market is unsustainable if tariffs are enacted, as this will significantly alter shipping dynamics and price structures."

In the agricultural sector, Ghana's Cocoa Board has revised its production estimates downward, forecasting cocoa output to fall to approximately 600,000 tons for the 2024/25 season. This revision comes as adverse weather and disease outbreaks impact crop yields, although the output still reflects a 36% increase compared to the previous year.

Overall, the interplay between geopolitical stability and economic policy will likely dictate market fluctuations in the coming months. With tariffs looming on the horizon, particularly in key commodities, stakeholders must remain vigilant as trade negotiations unfold and geopolitical tensions evolve.

As the global landscape continues to shift, the implications of tariffs extend beyond immediate pricing effects, potentially reshaping international trade relations and economic strategies in the long term. Analysts emphasize the need for companies and governments alike to prepare for a reality where tariffs may not only impact costs but also dictate market access and competitive positioning in a rapidly changing global economy.