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Commodities: oil, metals and crops
· Asset or instrument
Fact, law or dataA rule, statute, definition or measured number.
Commodities are interchangeable raw materials, such as oil, natural gas, copper, wheat and coffee, bought and sold in bulk at global prices.
See it on the Money & Finance map →How it works
Prices swing with supply shocks and the business cycle. US crude oil hit about $147 a barrel in July 2008 and fell below $40 by December; in April 2020, with storage full, one futures contract briefly settled below zero. Investors rarely hold barrels. They use futures, commodity index funds and ETFs, or producer stocks. Futures must be rolled forward, which costs money when later contracts are pricier ('contango') and earns it when they are cheaper ('backwardation'). Commodities pay no income.
Why it matters
Raw-material prices feed straight into inflation, company costs and whole economies; oil spikes helped cause the 1970s stagflation and several later recessions.
Facts, rules and data
Exchange price records (CME Group, ICE), the S&P GSCI and Bloomberg commodity indexes, and studies such as Gorton and Rouwenhorst's 'Facts and Fantasies about Commodity Futures' (2006).
Debates and risks
Whether commodities still diversify a portfolio after weak returns in the 2010s, and how much speculators move prices, are disputed.
Inside this (3)
Connections (9)
▸Commodities: oil, metals and crops include Gold and precious metals as investmentsFact, law or data
The connection
Gold trades like other commodities, on New York's COMEX futures market and in London's bullion market, priced in dollars per troy ounce. But nearly all gold ever mined still exists, about 216,000 tonnes, so investment and central-bank demand, not consumption, drive its price far more than for oil or wheat.
When and why
London's bullion market, run under LBMA rules, and COMEX in New York are the main hubs; gold sits in commodity indexes such as the S&P GSCI.
How we know
World Gold Council estimates of above-ground stocks and of annual demand from jewelry, investment, industry and central banks.
Debates and risks
Whether gold behaves more like a currency than a commodity: it tends to move against the dollar and real interest rates, not the business cycle.
▸Commodities: oil, metals and crops are traded through Futures contractsFact, law or data
The connection
Most commodity prices are set in futures markets: WTI crude in New York, Brent in London, corn and wheat in Chicago. Farmers and oil producers sell futures to lock in prices; airlines and food makers buy them. Speculators take the other side. Commodity ETFs such as USO hold futures, so they can lag the spot price.
When and why
CBOT grain futures from 1865, the London Metal Exchange from 1877, NYMEX crude oil futures from 1983.
How we know
CFTC Commitments of Traders reports show hedgers and speculators; exchange prices serve as benchmarks in physical supply contracts worldwide.
Debates and risks
How much financial investors raised commodity prices and volatility in the 2000s, the 'financialization' debate, remains disputed among economists.
▸Commodities: oil, metals and crops spiked during The Great Inflation and 1970s stagflationFact, law or data
The connection
Oil was the headline: the 1973–74 Arab oil embargo and OPEC price hikes quadrupled prices to about $12 a barrel, and the 1979 Iranian revolution pushed them toward $40. Grain and metals also surged. Because oil runs through transport, heating and production, these jumps raised costs across the economy and fed wage demands.
When and why
1973–74 and 1979–80, triggered by Arab OPEC members' embargo during the Yom Kippur War and by Iran's revolution.
How we know
Oil price records and BLS energy price data show the spikes, timed with the inflation peaks of 1974 and 1980.
Debates and risks
Whether oil shocks cause lasting inflation, or only when a loose Fed accommodates them, is debated; the 2026 shock revived the question.
▸The 2026 Iran-war oil shock and the Fed's return to hikes sent Brent crude above $120 in Commodities: oil, metals and cropsFact, law or data
The connection
With the Strait of Hormuz largely shut and millions of barrels a day offline, buyers bid for scarce cargoes. Brent crude, about $71 before the strikes, topped $120 in late April 2026 despite a record 400-million-barrel release of emergency stocks. Gasoline, jet fuel, shipping and LNG prices rose with it.
When and why
From February 28, 2026; Brent futures crossed $120 on April 29 after the US rejected an Iranian offer to reopen the strait.
How we know
ICE Brent futures prices and IEA statements; price moves track news on the strait's closure and talks to reopen it.
Debates and risks
How fast prices fall if Hormuz fully reopens, and whether the war leaves lasting damage to Gulf output, were open in October 2026, with Brent near $84.
▸Bills of lading: the shipping document that controls the goods transfer ownership of shipped Commodities: oil, metals and cropsFact, law or data
The connection
Oil, grain and metals are often sold several times while at sea. Each sale passes the bill of lading down the chain, and banks lend against cargoes by holding it. Because ships can arrive before the paper, cargoes are often released against a letter of indemnity, a gap fraudsters exploit.
When and why
In trading hubs such as Singapore, Geneva and London; Singapore oil trader Hin Leong collapsed in 2020 owing banks about $3.5 billion.
How we know
Court records in the Hin Leong case, whose founder was convicted in 2024 on forgery-related and cheating charges, and bank losses disclosed in commodity-finance frauds.
Debates and risks
How much commodity finance rests on documents that are duplicated or forged, a risk electronic bills of lading aim to remove.
▸Shanghai INE yuan crude oil futures (2018) aim to rival Brent and WTI in Commodities: oil, metals and cropsFact, law or data
The connection
Brent, traded in London, and WTI, in New York, set the price for most of the world's oil. Shanghai aims to be Asia's benchmark for the Middle Eastern crude Asia buys. It trades heavily, but mostly among Chinese traders, and China's capital controls limit outside use.
When and why
Launched 2018; it has ranked third globally among crude contracts by volume.
How we know
Futures Industry Association rankings and exchange statistics.
Debates and risks
Whether its volume reflects lasting benchmark status or mostly short-term speculation.
▸Sovereign wealth funds: nations' investment portfolios largely grew out of selling Commodities: oil, metals and cropsMainstream view
The connection
Many of the largest funds were created to turn oil and gas revenue into lasting financial wealth: Kuwait, Abu Dhabi, Norway, Qatar, Saudi Arabia. Investing abroad also keeps windfalls from overheating the home economy and cushions budgets when commodity prices fall. Others, like China's CIC and Singapore's GIC, come from trade surpluses instead.
When and why
Kuwait 1953, Abu Dhabi 1976, Norway 1990 and Qatar 2005, among others.
How solid is the link?
Funds' founding laws and mandates, and trackers such as Global SWF that classify each fund's source of money.
Debates and risks
If the energy transition cuts oil revenue, funds may shift from saving to spending, changing their role in markets.
▸Toronto Stock Exchange (TSX): banks, energy and mining is heavy with producers of Commodities: oil, metals and cropsFact, law or data
The connection
Energy and materials companies make up roughly a third of the S&P/TSX Composite, and Canadian banks lend heavily to them. When oil, gold or copper prices rise, the index and the Canadian dollar often rise too. The TSX and TSX Venture list more mining companies than any other exchanges, about 40% of the world's.
When and why
Toronto and Calgary; producers such as Canadian Natural, Suncor, Agnico Eagle and Nutrien.
How we know
TMX mining-listing statistics and S&P Dow Jones Indices sector weights.
Debates and risks
Whether climate policy shrinks the oil-heavy part of the index or boosts demand for the metals its miners produce.
▸London Metal Exchange and the 2022 nickel squeeze sets world prices for metals among Commodities: oil, metals and cropsFact, law or data
The connection
LME prices are the reference for physical metal deals worldwide: a copper mine in Chile or a wire maker in Korea typically sells or buys at an LME price plus a premium. LME warehouse stocks signal supply tightness, and its three-month copper price is watched as a gauge of the world economy.
When and why
London, since 1877; key metals include copper, aluminum, zinc, nickel, lead and tin, with official prices set daily.
How we know
Industry contracts referencing LME official prices, LME warehouse stock reports, and economic studies of copper as an indicator.
Debates and risks
Whether the Shanghai Futures Exchange, now busier in some metals, will take pricing power from London as China dominates demand.