Commodity Markets Bracing for 'Super-Squeeze'

HSBC's chief economist for Australia, New Zealand, and global commodities, Paul Bloxham, has warned of a 'super-squeeze' in commodity markets due to ongoing conflicts in the Middle East. The Strait of Hormuz, through which one-fifth of global oil consumption passes, has seen traffic nearly stall, while disruptions have spread south to the Bab el-Mandeb Strait.

The conflict between Russia and Ukraine has also intensified in the Black Sea, putting pressure on grain exports and other bulk commodities. This has led to a substantial squeeze back into commodity markets, with consequences extending beyond oil prices and into the broader economy.

HSBC's warning is not just about $100 oil, but about the risk that multiple global supply chokepoints remain impaired long enough for inventory buffers to disappear. Once this happens, commodity markets can move in nonlinear ways, producing sharper price swings than investors have grown accustomed to over the past year.