What the collapse of the US and Iran ceasefire teaches businesses about commodity price risk
Every business likes falling prices. The problem is assuming they will stay there.
Over the past month oil markets have shown exactly why. Prices fell sharply on hopes of a lasting US and Iran agreement, then reversed as that agreement unravelled. Businesses that treated the lower price as a new normal are now revisiting budgets, tenders and customer pricing. Commodity price volatility rarely disappears just because prices temporarily fall.
A memorandum of understanding signed on 17 June reopened the Strait of Hormuz and began a 60 day negotiating window. Within three weeks it had broken down. Brent fell below $70 a barrel before rebounding above $80 as the ceasefire unravelled.
Markets priced peace faster than peace arrived.The cost of that correction has landed on the businesses least able to absorb it.
Fuel: Falling prices changed the problem, not the risk
UK diesel peaked at 192.14p a litre in mid April. By the week of 6 July it averaged 164.77p, and June produced the largest monthly fall in diesel prices the RAC has recorded since it began collecting the data in 2000. That was welcome relief for fleet operators. Less welcome for anyone who fixed a haulage rate in April believing 190p was the new normal, and a different problem again for anyone who tendered in early July believing 165p was.
Consider a fleet drawing 40,000 litres a month. A 25p swing either way is £10,000 a month, or £120,000 over a contract year. The figure is illustrative rather than a forecast, but the scale of it is the point. Very few SME contracts have the headroom to absorb a movement that size without eroding margin or forcing difficult conversations with customers.
Metals: Exchange prices don’t tell the whole story
The same lag shows up differently in metals. LME three month aluminium closed near $3,087 a tonne on 3 July, roughly 17 per cent below where it sat in early June. A procurement lead watching the exchange price would reasonably expect supplier quotes to follow it down.
Many have not. Emirates Global Aluminium declared force majeure on European billet contracts in April after a drone strike on its Al Taweelah smelter, and that force majeure remains in place while the plant restarts. Regional premiums, alloy surcharges and freight have not tracked the exchange price down. The exchange price is only one component of what a fabricator actually pays, and in a supply shock it is often the component that recovers first.
Any buyer facing a blanket price increase should ask their supplier to break the quote into its parts. LME base, origin premium, conversion, freight. When the exchange price falls and the delivered price does not, the explanation sits in one of those lines.
Agriculture: Lower prices don’t mean certainty
Nitrogen tells the sharpest version of the story. Urea climbed above $850 a tonne in April, up 80 per cent from February, after the closure of the strait cut off a region responsible for around a quarter of global urea exports. It has since fallen by close to half, back near pre conflict levels. Lower prices reflect improving supply as well as weaker demand, with many growers simply stopping buying at April’s levels.
The relief is uneven. Phosphates have barely moved, because sulphur remains expensive, and the World Bank still expects the fertiliser index to average more than 30 per cent higher across 2026.
For farms buying inputs months ahead of harvest, timing now matters as much as price. Delaying purchases preserves cash flow. It also leaves the budget open to another sharp move if supply tightens again.
What this asks of a finance or procurement lead
Three questions are worth putting on the table this month.
What price did you assume in the budget, and what happens to margin at that price plus 20 per cent? If nobody has run the number, the exposure is unmeasured rather than absent.
Where does the risk sit contractually? A fixed price customer contract with a floating input cost means the business carries the whole movement. A cost plus arrangement or a surcharge mechanism moves some or all of it. The same commodity swing produces very different outcomes depending on which structure is in place.
How long is the decision window? Refiners and processors commit to supply weeks in advance. A business that reprices monthly cannot respond to a market that moves in days.
Businesses that were better prepared for the last six months were generally not the ones trying to predict the ceasefire. They were the ones that already understood what a $30 move in Brent would do to their costs and had decided in advance how much of that exposure they were willing to carry.
Commodity prices eventually settle. The cost of being unprepared rarely does.
Attara helps UK businesses understand and manage commodity price risk across fuel, metals and agriculture. Attara is a registered trading name of Foenix Partners Ltd, authorised and regulated by the Financial Conduct Authority (FRN 785907).
Market data cited is accurate as of 13 July 2026. Illustrative figures are hypothetical and provided for explanation only.
The cost of that correction has landed on the businesses least able to absorb it.
