Weekly Insights - 1st March 2026

Oil

Markets are primed for significant moves next week, following a decision by the U.S. and Israel to enter a new war with Iran, with first-day attacks resulting in the death of Iran's long-time Supreme Leader; Ayatollah Ali Khamenei.

The situation is already having huge potential consequences for global energy and shipping. As Iran continue to fire missiles at neighbouring countries, activity in the Strait of Hormuz, a narrow shipping chokepoint through which 20% of the world's oil and gas flows, slowed to a near halt today. With Iran declaring the strait closed, and Houthis threatening attacks, dozens of ships are currently waiting at the entrance and exit to the Strait, waiting for tensions to ease. In the meantime, insurers are demanding huge increases in premiums, or in some cases not offering insurance at all to ships linked to the US and Israel.

The Strait of Hormuz separates Iran (to the North), and Saudi Arabia, Qatar, UAE and Oman to the South.

In an attempt to calm the market, OPEC+ met today and agreed on a production increase of 206,000 barrels per day from April. However, this relatively small boost to output (represents less than 0.2% of global demand) will likely do little to ease upward momentum on prices.

Brent crude, which by Friday had already rallied to $73/bbl (it's highest price since July 2025), today jumped 10% to around $80/bbl in OTC trading. This is not the end of the story though. With futures trading closed over the weekend, all eyes will be on Monday's market open, with predictions that Brent could open close to $100/bbl. Any prolonged closure of the Strait could even see prices exceed this level.

From a shipping perspective, expectations are also that freight rates will continue their significant rise. VLCC and other dirty tanker rates, already at multi-year highs, will command even more of a premium as flows get diverted, tonne-miles increase and war-risk premiums are factored in.

Natural Gas

Global gas markets have so far been steadier, but face similar disruption risks. LNG flows from the gulf may be interrupted, with Iran reportedly warning LNG tankers (particularly Qatari ships) not to pass through Hormuz. Several Qatari LNG tankers have already slowed, or turned back completely, briefly spiking Asia's JKM and Europe's TTF futures.

Nonetheless, underlying gas fundamentals remain loose. US LNG export capacity and Qatari output are at record highs. A mild end to winter in the Northern Hemisphere, plus ample Russian/EU pipeline supply, has pushed TTF gas to around €32/MMBtu before the weekend (down 28% month-on-month), with Henry Hub near multi-year lows at $3/MMBtu. The supply surge has kept a lid on TTF prices, even as European storage is still well below normal (around 30% full).

Agricultural Products

Grain and oilseed markets are reflecting abundant global supply and farm policy.

In the U.S., USDA forecasts 2026 plantings at 94 million acres of corn (down from 98.8m last year) and 85m of soybeans (up from 81.2m). Nevertheless, harvests for both crops will be the second-largest ever, keeping ending stocks large. Brazilian second corn ("safrinha") output is also historically large.

The USDA projects that 2026/27 average prices will be modestly up from current levels, at about $4.20/bu corn, $10.30 soybeans, $5.00 wheat.

Fundamentally, corn is pressured by record stocks in the U.S. and Brazil, even as ethanol demand provides support. Soy has firmed somewhat on strong demand for crushing and biofuels, and reduced exportable supplies (Argentina's crop worries). Global wheat remains tight, with Chicago soft red futures near 2025 highs - around $7.50/t - due to export limits on Ukraine and strong global feed demand.

Markets are calm, but prices will be sensitive to weather and trade policy. U.S. farmers are receiving $12bn in aid and face lower input costs, somewhat cushioning the supply glut. On the demand side, biofuel blending is a growing demand source for corn (ethanol) and soy (biodiesel). Outside the U.S., Chinese buying remains modest, and India's export policy is tempering rice markets.

Biofuels

Bio markets are dominated by policy developments. Last week in the U.S., the EPA confirmed the long-delayed 2026-27 RFS "Set 2" rule is headed to final review. This proposal calls for much higher volume obligations - particularly for biomass-based diesel (renewable diesel) and advanced biofuels - than years prior. The EPA plans to finalise the 2026/27 blending mandates by the end of March. EPA is also signalling a squeeze on "small refinery exemptions" (reducing the volume of biofuels exempted), which will boost domestic ethanol and biodiesel demand.

In Europe, ethanol prices have been boosted by tight supply and strong mandates. New RED III rules remove double-counting for advanced feedstocks, meaning more conventional ethanol is needed to meet obligations. Combined with the UK-EU trade deal diverting U.S. ethanol to the UK and EU tariff changes, EU ethanol imports are plunging, resulting in spot ethanol in Northwest Europe nearing two-year highs.

Vegetable oil (rapeseed, palm, used cooking oil) prices have also been firm, underpinning diesel-blend fuel (HVO) prices. Overall demand for biofuels remains strong, with the key uncertainties being final RFS volumes and crop feedstock availability.

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