Why Commodities Surged 12% in July 2026 and What It Means for Markets

Commodities surged ~12% in July 2026, making them the best-performing asset class for the month and extending their year-to-date gain to ~39%, driven overwhelmingly by the reignition of US-Iran hostilities in the Middle East, which triggered severe energy supply disruptions, a spike in crude prices, and broad-based spillovers into other commodities and asset classes .

What drove the July 2026 surge

Collapse of the June ceasefire & renewed US-Iran war. A brief Memorandum of Understanding in June had reopened the Strait of Hormuz, sending commodity indexes tumbling ~9.6% that month . When hostilities resumed in July, the reversal was violent. The US reimposed a naval blockade covering Iran's entire coastline, ports, and oil terminals . Iran's Revolutionary Guards declared the Strait of Hormuz "completely closed" . Daily ship traffic through the strait — which normally carries a fifth of the world's oil — plummeted .

Crude oil prices spiked violently. Brent crude jumped 9% in a single day to $83/bbl on July 12 after the blockade news . By July 20 it had breached $90/bbl , by July 23 it hit $96/bbl , and on July 24 it topped $100/bbl for the first time in weeks as the conflict widened to the Red Sea via Houthi attacks on a second global shipping corridor .

Houthi attacks opened a second front. Iran-aligned Houthis threatened to close the Red Sea oil route, compounding the Strait of Hormuz disruption and driving energy prices even higher .

Energy led, but agriculture and metals followed. The rally was heavily concentrated in energy and agriculture . Backwardated energy curves delivered exceptional returns across crude, gasoline, and diesel . Agricultural commodities found additional support from a confirmed super El Niño weather pattern, which threatened grain and soft-commodity supplies, while metals like steel surged to multi-year highs on supply-chain fears .

Ripple effects into other asset classes

Gold and silver posted gains despite headwinds. Both precious metals managed weekly gains even as markets grappled with surging crude prices, rising inflation expectations, a stronger US dollar, higher Treasury yields, and increased odds of tighter Fed monetary policy — reflecting resilient safe-haven demand amid extreme geopolitical uncertainty .

US dollar strengthened and Fed rate-hike odds rose. The Bloomberg US Dollar Index recorded its best monthly performance of the year in June and the dollar remained bid in July . The July escalation pushed Fed rate-hike odds sharply higher as inflation expectations surged, creating a complex environment for bonds and rate-sensitive assets .

Equities came under pressure. Global equity markets turned mixed to negative as the energy shock raised stagflation fears. Higher oil prices, rising yields, and a stronger dollar weighed on stock indexes .

Volatility expected to persist. S&P Global Market Intelligence analysis indicated commodity prices will remain elevated above pre-conflict levels through at least 2028 due to lasting infrastructure damage and elevated geopolitical risk . The World Bank had already forecast a 24% surge in energy prices for 2026, the highest since Russia's 2022 invasion of Ukraine , and the July escalation only reinforced that outlook. Analysts across UBS, Saxo Bank, and Invesco flagged that every diplomatic signal is being met by immediate military escalation, keeping the market in a state of maximal uncertainty .