Barclays warns that an intensifying El Niño could trigger a new wave of commodity shortages, affecting everything from food crops to industrial metals and energy markets, amid warnings of tighter global supply forecasts.
Barclays is warning that a new commodity shock may be forming as El Niño strengthens and tight markets spread beyond agriculture into energy and metals. The bank’s Craig Rye said a growing likelihood of a major weather event increases the risk of disruption across global supply chains, with the most acute effects likely to hit crops first and then ripple into industrial materials.
According to Barclays, forecasts from the International Research Institute for Climate and Society suggest the El Niño index could peak near 3.2 degrees Celsius between late 2026 and early 2027. That would make it roughly 15% stronger than the 2015-16 Super El Niño, a benchmark event that hurt harvests, lifted food prices and strained power systems in several regions.
The bank expects palm oil, coconut oil and rubber to post the sharpest gains, while robusta coffee and rice could also rise as drought threatens production in parts of south-east Asia and Central America. Barclays sees the shock broadening into industrial commodities too, with aluminium and copper both vulnerable to higher prices if mining output is hit, hydropower falls and electricity demand shifts. Thermal coal could also become more expensive if power markets tighten further.
That view fits a wider market narrative that commodity scarcity is returning after years of underinvestment and low inventories. HSBC has separately warned that the global zinc market is flashing signs of tightness, while its economists have also flagged the risk of a broader food shock as grain supplies narrow and weather patterns worsen. Bloomberg reported in March that Goldman Sachs expects some of the biggest oil market damage from Middle East conflict to show up first in refined products such as diesel and jet fuel, not just crude. Shell has also warned that fuel disruptions may spread from Asia into Europe as the shock works its way through global markets.
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