Commodities for Tuesday, Nov. 25, 2025

Key Concepts Ukraine-Russia Peace Agreement, Crude Oil Surplus, Sanctions (Russia), Interest Rates & Gold, Agricultural Commodity Markets (Wheat, Soybeans), Fertilizer Industry, Pipeline Projects (Canada), Mining Disputes (Barrick in Mali), Mergers & Acquisitions (M&A), Copper Assets, Geopolitical Trends, Supply Chain Control, Protectionism / Economic Nationalism, Regulatory Scrutiny, Economic Containment, Cold War Two, Taiwan Conflict Risk, Economic Amputation, Semiconductor Industry (Chips), Global GDP Growth, Electric Vehicles (EVs), LNG Export Terminals.

Global Commodity Market Overview

The energy complex is currently influenced by geopolitical developments and economic forecasts. Discussions suggest Ukraine and Russia may be nearing a peace agreement, with ABC News and CBS reporting that US officials believe Ukraine has agreed to potential pact terms. Reuters, however, notes a Ukrainian official's support for the "essence of a framework for peace" while acknowledging that "sensitive issues remain to be discussed."

Crude Oil Outlook: Deutsche Bank warns of a significant crude oil surplus of at least 2 million barrels per day next year (2026), with no clear path back to a balanced market or deficits even by 2027. This outlook is bearish due to ample oil supply. The potential removal of sanctions on Russia would further exacerbate this bearish trend by reintroducing substantial Russian crude to the world market.

Gold Performance: Gold is moving higher, partly due to speculation that Kevin Hassett, a close ally of US President Donald Trump and current White House National Economic Council Director, might become the next head of the Federal Reserve. Hassett is seen as backing Trump's preference for lower interest rates, which are generally considered favorable for gold.

Agricultural Commodities: Wheat prices are up, which is counter-intuitive given that an end to the war in Ukraine would typically increase supplies. However, Kyiv managed to get more grain onto global markets after initial blockades, and Russian crop exports were never subject to sanctions, continuing to ship grains. Bloomberg suggests a peace deal "probably won't be a huge deal in the near term for agricultural markets." A peace deal could, however, aid Ukraine by facilitating grain exports through repaired railway networks and potentially impact the fertilizer industry (e.g., Nutrien) by increasing Russian and Belarusian fertilizer supply.

Other Commodity-Related Developments

Canadian Pipeline Project: Reports indicate that the Canadian federal government and Alberta have agreed to terms for a new pipeline to the West Coast, with an announcement expected soon. This deal will include "special exemptions" for the project. British Columbia Premier David Eby has expressed opposition, advocating for a cap or ban on the use of taxpayer dollars for pipeline construction.

Barrick Mining Dispute in Mali: Barrick Mining has agreed to pay $430 million US to the government of Mali to resolve a dispute over its large mine in the country. Barrick will pay approximately $250 million within six days of signing the deal, with the remainder via credit offsets, and will regain operational control of the mine.

Mining Sector Mergers & Acquisitions: Australian mining group BHP has abandoned its latest attempt to take over Anglo American. This development seemingly "green lights" Anglo American's plan to acquire Vancouver-based Teck Resources.

Geopolitical Influences on Mining and Commodities: An Expert Perspective

Maximilian Hess, Principal at Edmonton Advisory and a Fellow at the Foreign Policy Research Institute, discussed the drivers and challenges in the mining sector.

Copper Assets and M&A: Hess highlighted that valuable copper assets are the primary driver of significant M&A activity. Anglo American's interest in Teck Resources is specifically focused on Teck's joint copper operations, particularly in Chile. This trend is fueled by geopolitical shifts, including an increased global interest in controlling supply chains and commodity markets, especially given copper's critical role in AI and renewable energy technologies.

Challenges for Anglo American-Teck Deal: The proposed Anglo American-Teck merger faces several hurdles. The Canadian federal government is reportedly imposing tougher terms than initially proposed. Questions remain regarding Anglo American's future headquarters and whether its primary listing will remain in London or move to Canada, a move reportedly pushed by the Canadian government due to regulatory and enforcement differences. The deal also faces a key shareholder vote and ongoing regulatory scrutiny. Hess noted that BHP's earlier bid for Anglo American was contingent on divesting Anglo American's assets, such as its coal portfolio, diamond mines in Botswana, and a fertilizer mine in the UK, all of which faced geopolitical and operational challenges.

Rise of Protectionism: Hess emphasized that protectionism is gaining significant traction globally, including in the United States and the European Union. He suggested that a potential Canadian government veto of the Anglo American-Teck deal, while possibly signaling protectionism, aligns with a broader global trend where countries are increasingly expected to defend domestic industries. Canada, with Teck being one of its last very large domestic mining firms, faces complex geopolitical questions regarding the regulation of its mining industry.

Future of Copper Market: Hess anticipates that the ultimate outcome of Anglo American's future, particularly regarding the Teck tie-up, will trigger further reverberations in the industry and potentially increase appetite for copper assets. He also noted a significant shift in global perspective: for decades, the focus was on intellectual property rather than the processing of metals. Now, with metal tariffs at the forefront of agendas (e.g., Trump's), and the high copper demand from AI data centers, there's a strong emphasis on controlling the entire supply chain, from raw commodities to finished chips.

Global Conflicts and Economic Implications: An Expert Perspective

Jason Schenker, President of Prestige Economics, provided insights into the broader economic implications of ongoing global conflicts.

Ukraine Conflict Resolution and Oil Prices: Schenker reiterated his long-held view (since March 2022) that the most likely outcome for Ukraine is a partitioned country, a "begrudged armistice," and a demilitarized zone, akin to the Korean War settlement. While there appears to be Ukrainian willingness for progress, the key question is Russian willingness. He warned that Putin might demand more expansive, maximalist terms for territory. In the medium term, the durability of any peace agreement is uncertain, as guarantees for Ukraine (weapons/support) could deter future conflict but also disincentivize Putin from agreeing. Regarding oil, Schenker stated that prices are currently under pressure due to global uncertainty. A peace deal announcement could lead to short-term significant downward pressure. However, if it fosters economic optimism, increased demand next year, coupled with anticipated interest rate cuts by central banks, could lead to higher oil prices in the long run. Global GDP is projected to be above 3% this year and next (IMF figures), indicating continued oil demand.

"Cold War Two" and Commodity Flows: Schenker's book, "Cold War Two," explores the implications of power tussles, particularly between the US and China.

• Russia-Ukraine Impact: Russia's role as a major commodity producer meant the war caused massive price spikes and global inflation. A potential armistice could lead to commodity prices coming down as more Russian oil, aluminum, and nickel become accessible.
• US-China and Taiwan Risk: The primary risk is China's ambition to control Taiwan, with 2027 (100th anniversary of the PLA) floated as a target year. Such an event could lead to "overnight economic amputation," cutting off goods from China and raising questions about supplies from Taiwan. While China is a net importer of commodities (which could be bearish if flows stop), the impact on finished goods would be inflationary.
• Semiconductor Industry Paralysis: A conflict over Taiwan poses a severe threat of paralyzing the entire tech industry due to the loss of access to Taiwanese chips. US policies, including trade tariffs and economic containment, aim to deter China from taking Taiwan, bolster US economic self-sufficiency, and provide credible deterrence. A permanent blockade of Taiwan, as seen in past "Joint Sword" operations, would result in economic amputation for both China and Taiwan, cutting off essential ICT goods. This also carries significant contagion risk for Asian economies like South Korea and Japan. Schenker concluded that calming the Russia-Ukraine front could allow more focus on deterring kinetic war with China over Taiwan.

Concluding Commodity Updates

Oil: A five-year chart shows oil prices down almost 20% in the past 12 months. Despite the US economy "ticking over" and China "doing okay" (though still grappling with construction sector debt), the increasing market share of electric vehicles in China is a notable factor.

Copper: Copper prices are trading not far off record highs, excluding an "artificial run-up" during the summer caused by US President Donald Trump's tariffs on some copper products, which later tanked when the scope of levies became clearer.

Gold: Gold is performing well today, buoyed by the prospect of a Trump ally potentially chairing the US Federal Reserve, which is associated with lower interest rates.

Soybeans: US soybean prices were depressed over the past year due to China rejecting imports. However, prices have recently rallied on signs that China is resuming soybean purchases. Soybeans have become a "bargaining counter" in the broader economic and technological competition between Washington and Beijing.

Wheat and Sanctions: Russia remains a dominant player in global wheat exports and was notably never sanctioned by the West. This highlights a selective application of sanctions, as sanctioning wheat would have created major problems for import-reliant countries like Egypt. Similarly, a significant amount of Russian nuclear fuels are still used in American nuclear reactors, indicating areas where sanctions were deemed "inconvenient."

Natural Gas (US): Natural gas prices in the United States have been rallying lately. Despite vast quantities of excess natural gas from shale fields (often burned off or given away), the economic logic supports the construction of LNG export terminals in both the US and Canada.

Synthesis and Conclusion

The global commodity landscape is currently shaped by a complex interplay of geopolitical tensions, economic forecasts, and strategic national interests. The potential for a Ukraine-Russia peace deal, while offering short-term downward pressure on oil prices, is viewed against a backdrop of projected crude surpluses and the long-term impact of sanctions. Gold benefits from expectations of lower interest rates, while agricultural markets like wheat and soybeans are influenced by both conflict dynamics and trade negotiations, with Russia's unsanctioned grain exports highlighting the selective nature of international economic pressure.

The mining sector is undergoing significant M&A activity, particularly for copper assets, driven by the increasing demand from AI and renewable energy sectors and a global push for supply chain control. This trend is met with rising protectionism, as exemplified by Canada's scrutiny of foreign takeovers of domestic mining giants like Teck Resources.

Looking ahead, the "Cold War Two" framework suggests that while a resolution in Ukraine could stabilize one front, the US-China rivalry, especially concerning Taiwan and its critical role in the semiconductor industry, poses a far greater risk of "economic amputation" and global inflationary pressures. The overarching theme is a shift from a focus on intellectual property to a renewed emphasis on controlling raw commodity supply chains and domestic industrial capacity, reflecting a more nationalistic and protectionist global economic environment. Despite short-term volatility, underlying global GDP growth is expected to support long-term demand for key commodities like oil.