[ING & MUFG Report] Geopolitical Tensions and Tariff Shocks: Deep Dive into the Volatile Commodity Market

Subtitle: From Fading Risk Premiums in Oil to Extreme Speculative Shifts in Agriculture

Original Report Date: February 23, 2026

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📌 3-Line Summary

- Crude Oil: Geopolitical tensions have added a risk premium to oil, but expectations for upcoming talks and easing backwardation suggest extreme supply fears are subsiding.
- Gold: Driven by US tariff policy confusion and a weaker dollar, the gold rally continues, though central banks like those in Russia and Lebanon are making divergent moves, including profit-taking.
- Agriculture: Speculative capital shows a stark contrast, with massive long positions in soybeans fueled by Chinese demand, versus record short positions in the sugar market indicating deep pessimism.

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📖 In-Depth Report Analysis

With recent spikes in the volatility of international oil and gold prices, navigating market direction has become increasingly difficult. Global investment banks ING and MUFG diagnosed that the commodity market is currently driven by two massive pillars: geopolitical issues between the US and Iran, and uncertainties surrounding US tariff policies.

■ 1. Crude Oil: Fading 'Risk Premium' and the Meaning of 'Backwardation'

Last week, Brent crude surged nearly 6% as geopolitical tensions peaked, driven by the deployment of US military assets to the Middle East and President Trump's nuclear deal deadline for Iran. However, early this week, Brent weakened to the $71 per barrel range.

ING assessed that a strong Risk Premium is currently priced into oil due to fears of supply disruptions in key chokepoints like the Strait of Hormuz. ING forecasts that if any diplomatic agreement is reached at the upcoming US-Iran talks in Geneva this Thursday, this premium could quickly dissipate, leading to a significant drop in oil prices.

MUFG pointed to the narrowing of backwardation (where spot prices are higher than futures) as another crucial clue. The easing of this phenomenon in the Brent market suggests that while tension remains, traders have somewhat let go of their extreme fear of immediate, short-term supply shortages.

■ 2. Gold: Behind the Rally and Diverging Central Bank Moves

Gold, the ultimate safe haven, is rising toward the $5,180 per ounce mark, marking its fourth consecutive week of gains. The reports unanimously cited US tariff uncertainties and the resulting weaker dollar as the primary drivers of this rally.

The US administration's surprise hike of temporary tariffs to 15% exacerbated global trade concerns, leading to a depreciation in the dollar's value. A weaker dollar makes gold relatively cheaper for non-US buyers, boosting demand and driving up prices.

Interestingly, central banks are taking divergent paths in this environment. Russia capitalized on peak prices in January by selling about 300,000 ounces of gold, its first sale since October of the previous year. Meanwhile, Lebanon, holding $45 billion worth of gold, is quietly discussing selling or leasing part of its reserves to cover massive financial losses from its 2019 economic collapse, a move evaluated as politically highly sensitive.

■ 3. Agricultural Market: A Stark Contrast Between Long and Short

In the agricultural market, distinct directional trends from speculative capital were observed.

For US soybeans, demand surged as China emerged as the top buyer, purchasing 415,500 tons in a single week. Consequently, speculative forces aggressively entered Long positions, betting on future price increases. Conversely, the sugar market (No. 11 raw sugar) witnessed the exact opposite. Speculators added 29,988 short contracts, pushing the net Short position to a record 241,777 contracts. This massive bet on price declines highlights extremely negative investor sentiment toward the sugar market.

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💡 StockHub Insight & Comments

The commodity market is currently hyper-sensitive to massive political variables—geopolitics and tariffs—rather than pure fundamentals. For crude oil, short-term volatility could explode depending on the outcome of Thursday's US-Iran talks, making it safer to observe the results before making directional bets. Gold, on the other hand, structurally benefits from a weaker dollar caused by tariff policy confusion, meaning maintaining its weight as a safe-haven asset in portfolios remains a valid strategy.