Commodity index hits highest level since 2008 crisis

Global commodity markets are experiencing their broadest rally in nearly two decades, with prices for oil, metals, and grains surging in tandem as war in the Middle East, booming demand from artificial intelligence infrastructure, and a weakening U.S. dollar converge to push raw-material costs to levels not seen since the 2008 financial crisis.

The FTSE/CRB Commodity Index, a widely tracked gauge of 22 raw materials, rose above 423 on September 9, up 42% from the start of the year, according to the Korea Economic Daily. That places the index within striking distance of its all-time high of 474, set in 2008. It is the sixth time since World War II that the index has climbed more than 30% within a single year.bloomingbit

Oil and War

The most immediate driver is the U.S.-Iran conflict centered on the Strait of Hormuz, through which roughly 20% of the world's oil typically flows. Brent crude futures settled above $101 a barrel on Wednesday after Iran and the United States exchanged their most intense wave of attacks on shipping since the war began, according to Reuters. The U.S. military destroyed five Iranian oil tankers earlier in the week in retaliation for Iranian ballistic missile attacks on a U.S. Navy warship, and Iran responded by firing missiles at a U.S. base in Jordan and attacking vessels near the strait.reuters+2

The U.S. Energy Information Administration said Wednesday that traffic through the Hormuz chokepoint would remain constrained through the end of 2026, with an average of 5.7 million barrels per day shut in, and that pre-war export levels would not return until the second quarter of 2027. The agency raised its forecast for average Brent prices this year to about $91 a barrel, a nearly 5% increase from its prior outlook.reuters+1

Copper, Gold, and AI

Unlike past commodity rallies, which were typically built on oil alone, this one is being powered across sectors. Copper hit a record $14,779 a metric ton on the London Metal Exchange on Monday, driven by surging demand from AI data centers, power grids, and electric vehicles, as well as front-loaded purchases ahead of U.S. tariffs, The Wall Street Journal News Corp ↘ 0.03% reported. Gold and silver have climbed more than 20% and 50%, respectively, from a year ago, buoyed by safe-haven demand and central bank buying amid dollar weakness.wsj+1

The Inflation Risk

The rally is already reshaping the global inflation outlook. The International Monetary Fund raised its forecast for worldwide inflation this year to 4.7% in July from 4.4% in April. Goldman Sachs The Goldman Sachs Group, Inc. ↘ 0.36% has warned that Brent could top $120 a barrel if Middle East tensions persist and regional oil production remains well below pre-war levels. Each of the five previous super rallies eventually fed into higher interest rates and, in most cases, recession.bloomingbit