Geopolitical upheaval, macroeconomic uncertainty and variable weather conditions are set to continue impacting commodity markets throughout 2025, causing volatility and divergency between markets. This puts a premium on risk management but also on nuanced and specialised market knowledge.
Some wildly divergent stories emerged from the commodities complex last year with, for example, precious metals registering near-record gains while US Henry Hub spot natural gas hit an all-time low in March 2024 and ended the year with its biggest two-year decline on record.
On top of an already daunting list of challenges, commodity producers and consumers now need to navigate shifting global politics and the somewhat unpredictable nature of policy changes under the new US administration.
The direction of travel in the US is, however, very clear in two areas: there will be an increase in protectionist policy; and a withdrawal of support for climate change initiatives. Both these policies will play out very differently across the commodities complex.
With the March introduction of a 25% tariff on all imports of aluminium and steel into the US, producers and consumers are already scouring their supply chains, updating costs and prices and looking into alternative arrangements. Producers, faced with higher demand from US firms, may be considering expanding their capacity. As the tariffs are global, US consumers, such as metals manufacturers and the automotive industry, will have little choice but to source domestically or pay higher prices.
With trade wars likely to escalate as other countries retaliate, the impact on the global economy is likely to be significant, say economists. In the short term it may trigger inflationary pressure, but in the longer term, the upending of global trade flows will act as a brake on economic growth prospects, they say.
Meanwhile, the new stance on environmental policy in the US is likely to have a profound impact on the transition plans of many energy firms. These plans mostly assume a higher level of political support for renewables and green energy than may now be the case. It will be interesting to see how many other energy firms adopt a similar stance to BP with its recent announcement to pivot away from renewables towards fossil fuels again.
Growing oil supply is likely to keep prices subdued this year, with analysts expecting a modest drop in the price of West Texas Intermediate crude over the year. While inventories of US natural gas are extremely high, analysts expect higher prices this year supported by global demand for liquefied natural gas and a colder than average winter in the Northern hemisphere.
However, fossil fuel markets, including coal, could be further supported in the coming months by rapidly growing power demand from data centres and electric vehicles, which is outstripping growth in renewables capacity.
Against this backdrop, commodity producers and consumers need to consider a wide variety of factors and potential outcomes. New models and new approaches to risk management may need to be considered, and timely access to markets will be essential if firms are to respond quickly to rapidly changing conditions.
This year’s Commodity Rankings tables show which brokers and dealers commodity market participants consider their best counterparties, having voted for them on criteria such as reliability, pricing, liquidity provision and speed of execution.
How the poll was conducted
The Energy Risk Commodity Rankings survey was live between November 11, 2024 and January 27, 2025 and received valid responses from 1,670 individuals.
The survey asked respondents to vote for their top three dealers and brokers in markets in which they had been active over the previous year. The rankings poll is designed to reflect market participants’ perception of a dealer or broker based on the overall quality of service they offer their clients. It is not intended to reflect volumes traded in any market. Instead, respondents vote according to a range of criteria including reliability, pricing, liquidity provision and speed of execution.
In order to create the final list of rankings, Energy Risk aggregates the results, weighting them by awarding three points for a first place, two points for second place and one point for third. The points are then added up and the highest placed firms in each category are listed in the Rankings tables. The Overall Rankings are calculated by adding up all the points accrued to each firm across the different sections (Oil, Gas, Power etc). Following closure of the poll, the results are subject to an internal review process, which can result in categories being dropped or aggregated if they do not have enough votes. The outcome of the review is final.