Recent analyses from multiple financial institutions highlight a shift in the outlook for both aluminium and oil markets, driven by recovering supply, softer demand, and ongoing geopolitical risks. TD Securities has downgraded its aluminium price forecasts, now expecting the metal to average $3,378/t in 2026 and $3,281/t in 2027, reflecting reductions of 5.0% and 9.8% from previous estimates. This adjustment is attributed to faster-than-expected ramp-ups in Middle East smelters, increased Indonesian supply, robust Chinese semi-fabricated exports, and weaker demand. The projected market deficits have narrowed significantly, with expectations of 1.2 million tonnes in 2026 and 234 thousand tonnes in 2027, compared to earlier consensus deficits of 2.5-3.0 million tonnes and 1.0-1.5 million tonnes, respectively. Despite the downward revision, TD Securities does not anticipate a major rout, citing ongoing deficits and potential supply risks in Indonesia and the Middle East, as well as possible Chinese export restrictions. The aluminium market is seen as oversold, with significant support expected in the $3,100-3,400/t range through 2027 [1].
In the oil market, ING’s Warren Patterson notes that Brent prices have fallen following a US–Iran Memorandum of Understanding on June 17, which enabled a faster-than-expected recovery of Persian Gulf supply. Brent is now forecast to average $80/bbl in 3Q26, $74/bbl in 4Q26, and $70/bbl in 2027. However, Patterson warns that renewed US–Iran tensions and uncertain Chinese demand could push Brent toward $100/bbl. The market is expected to remain in a slight deficit in the third quarter of this year, before moving to a surplus in the fourth quarter and a meaningful surplus in 2027. The outlook assumes no further major disruptions in the Strait of Hormuz, though recent re-escalations could alter this scenario [2].
BNY’s Geoff Yu emphasizes that oil prices have been supported by risks associated with the Strait of Hormuz, where shipping has nearly come to a standstill amid ceasefire uncertainties. The International Maritime Organization has advised shipowners to avoid the strait, and both the US and Iran have accused each other of violating the peace deal. While energy equities flows have stabilized after June profit-taking, increased OPEC supply and weak Chinese demand are expected to cap long-term oil price gains. The sector is expected to consolidate in the near term, pending clarity on the ceasefire. Additionally, the IMF has downgraded global growth forecasts, and central banks have warned that higher energy prices and tariffs could continue to fuel inflation. Recent energy volatility has already tightened financial conditions, reducing the urgency for further rate hikes [3].
TD Securities also highlights that the June FOMC minutes flagged rising inflation risks, with "most" participants willing to pursue further policy firming if supply-side shocks, including oil and tariffs, push inflation higher—even if the labor market remains stable. A new closure of the Strait of Hormuz is cited as a potential trigger for such a scenario [4].
CONCLUSION
The outlook for aluminium and oil markets has shifted lower due to recovering supply and weaker demand, but ongoing geopolitical risks, particularly in the Persian Gulf, continue to support prices and fuel inflation concerns. Market participants and central banks remain vigilant, with the potential for renewed volatility if supply disruptions re-emerge. Overall, the energy and metals sectors are expected to find support at lower levels, but significant upside is capped by structural and geopolitical factors.