February 07, 2024 (MLN): The wars in the Middle East and Ukraine, upcoming elections in many countries, and rising regulatory uncertainty for natural resources in some jurisdictions have renewed the focus on geopolitical and political risks for commodities markets, Fitch Ratings says in a new report.
Fitch expects the geopolitical price premium to continue for most commodities, including oil and gas, copper and defensive commodities such as gold but faltering economic growth along with significant spare oil capacity will limit the price rally.
Global demand growth across commodities, including oil, copper and aluminum, is likely to weaken in 2024 linked to global economic growth and China’s GDP growth forecast of less than 5% as its property market struggles to stabilize.
The supply response including production interruptions will determine the market balance.
A large spare OPEC+ capacity of over 5 million barrels of oil per day provides a significant buffer to mitigate disruption.
In addition, the European gas market remains comfortably supplied. The entity does not expect the temporary pause in approvals of US liquefied natural gas (LNG) export facilities to affect global LNG supplies in 2024.
Global copper supply will be affected by the suspension of operations at the Cobre Panama mine, following the ruling by Panama's Supreme Court that a law on the mine’s new concession agreement with First Quantum Minerals Ltd. (B+/Rating Watch Negative) is unconstitutional.
