Commodities for Tuesday, Jan. 13, 2026

Key Concepts

• Geopolitical Risk & Oil Prices: Drone attacks in the Black Sea impacting oil tanker traffic and raising concerns about supply disruptions.
• Heavy Oil Expertise: Canada’s potential role in assisting the US with rebuilding Venezuela’s oil industry.
• Metals Market Volatility: Fluctuations in copper and aluminum prices driven by geopolitical factors and potential trade policy changes.
• Alberta Heavy Crude Discount: Forecasted widening of the discount due to increased supply from Venezuela.
• China-Canada Trade: Potential easing of restrictions on canola products in exchange for relaxed tariffs on Chinese electric vehicles.
• Gold & Silver Production: AIA Gold and Silver’s record production figures and positive outlook.
• Floating Oil Storage: Significant increase in oil held in storage, particularly Iranian and Venezuelan crude.
• OPEC+ Dynamics: OPEC+ production cuts and the impact of non-OPEC supply on oil prices.
• US Dollar & Gold: The relationship between US dollar strength/weakness and gold’s role as a store of value.
• Lundin Gold’s Performance: Strong financial results, high dividend yield, and promising copper discovery.

Energy Complex & Geopolitical Risks

The energy complex is currently facing a new wave of geopolitical risk following reported drone attacks on two oil tankers in the Black Sea, one of which was chartered by Chevron. These tankers were en route to a terminal on the Russian coast, a key loading point for both Kazakh and Russian crude oil. While the perpetrators remain unidentified, Ukraine’s drone strikes on Russian oil facilities are a contributing factor. Oil prices have risen sharply in response to these events, raising the prospect of further disruptions to Russian and Kazakh oil flows. Kepler’s Matt Smith noted the evolution of Ukrainian tactics, from onshore refinery strikes to attacks at sea, specifically mentioning the use of limpet mines.

Canada, Venezuela & US Oil Strategy

Adam Waterous of Strathcona Resources proposed that Canada leverage its expertise in heavy oil to assist the US in rebuilding Venezuela’s oil industry. Waterous believes Canada possesses unparalleled expertise in this area and offered to send a technical team to aid in the effort. This comes as the US considers increasing imports from Venezuela, potentially impacting Canadian crude exports. CIBC analysts are forecasting a wider discount for Alberta’s heavy crude this year due to the anticipated increase in Venezuelan supply, as both regions require specialized equipment to refine their crude into usable products.

Metals Market Update

The metals market has experienced volatility, with selling pressure on copper and aluminum. However, aluminum is trading at its highest level in over three years, and copper briefly surpassed record highs amid speculation about potential massive sanctions from Donald Trump. While the sanctions weren’t as severe as feared, they triggered a surge in copper imports into the US. Concerns remain about softening demand for both copper and aluminum due to geopolitical conflicts and potential economic slowdowns. Copper is currently trading above $6 USD.

Trade Dynamics: China & Canada

China is reportedly considering easing restrictions on Canadian canola products in exchange for relaxed tariffs on Chinese electric vehicles. Chinese authorities are planning to discuss reducing levies on industrial products from China if Canada agrees to increase its canola imports. Canadian officials are hopeful for easing trade frictions but have downplayed the likelihood of a quick deal on electric vehicle tariffs.

AIA Gold & Silver Production

AIA Gold and Silver reported a 2% increase in production in the fourth quarter, achieving record production for both the quarter and the full year. Ore production increased by 14% per day from the previous quarter, driven by strong output from its mine in Morocco.

Oil Market Analysis with Matt Smith (Kepler)

Matt Smith, Lead Oil Analyst at Kepler, discussed the implications of the Black Sea attacks. He highlighted that Ukraine is actively targeting Russian oil infrastructure, both onshore and now at sea, impacting Russian exports. He noted a significant increase in floating oil storage, reaching a multi-year high of approximately 120 million barrels, with a substantial portion consisting of sanctioned oil from Russia, Venezuela, and Iran (20 million, 30 million, and 50 million barrels respectively).

Smith explained that much of the Iranian crude is stored off the coasts of China and Malaysia, awaiting purchase by Chinese buyers. He suggested that China may be deliberately slowing down purchases to exert price pressure on these sanctioned oil producers. Despite an oversupply in the oil market, with a projected surplus of 500 million barrels in the first six months of the year, geopolitical tensions are keeping prices elevated, currently around the mid-$60s per barrel for Brent crude, despite fundamentals suggesting a price closer to the $50s. He emphasized that geopolitical factors are adding a significant risk premium to oil prices.

Gold Market & US Dollar Dynamics

Gold prices surged to new record highs, exceeding $4,600, driven by concerns about US institutional stability and the potential for a weakening US dollar. Daniel Gallo, Director of Commodity Strategy at TD Securities, explained that while the initial reaction to attacks on the Federal Reserve was muted in bond markets, precious metals, particularly gold, benefited from its role as a store of value. He noted that gold is becoming increasingly institutionalized, with the largest gold ETF now held by institutions to a similar degree as the most popular S&P 500 ETF.

Gallo cautioned that the “debasement trade” driving gold prices could reverse, and that a strengthening of US institutions could put downward pressure on gold. He highlighted the upcoming Supreme Court case regarding the potential removal of Fed Governor Lisa Cook as a key test of US institutional strength. He indicated a neutral stance on gold at current prices, favoring platinum group metals as a more attractive investment opportunity.

Lundin Gold’s Performance & Future Prospects

Jamie Beck, CEO of Lundin Gold, reported strong financial performance, with production slightly below the lower end of guidance but still exceeding expectations. The company’s Fruta del Norte mine boasts a high-grade ore body (8.3g per tonne) and low all-in costs (barely above $1,000 USD). Lundin Gold is prioritizing returning capital to shareholders through a high dividend yield (approximately 3.7%) and a policy of distributing at least 50% of free cash flow.

Beck announced a significant copper discovery near the Fruta del Norte mine, potentially representing a district-scale deposit. He emphasized the company’s strong relationship with local stakeholders in Ecuador, which has helped it navigate the country’s political landscape successfully. Lundin Gold’s stock has significantly outperformed the gold stock index over the past five years, driven by its strong operational performance and capital allocation strategy.

Conclusion

The commodities market is currently navigating a complex landscape shaped by geopolitical risks, shifting trade dynamics, and evolving investor sentiment. Oil prices are sensitive to disruptions in supply, particularly in the Black Sea region, while the metals market is reacting to potential trade policy changes and concerns about economic growth. Gold is benefiting from its safe-haven status amid concerns about US institutional stability and the potential for a weakening US dollar, but its future performance will depend on the evolution of these factors. Companies like Lundin Gold are demonstrating strong performance and capitalizing on favorable market conditions, while also exploring new opportunities for growth through exploration and strategic investments. The overall takeaway is that a nuanced understanding of these interconnected factors is crucial for navigating the commodities market effectively.