HSBC says risks in the Hormuz Strait are intensifying, with commodities caught in a 'super squeeze'.

According to HSBC Holdings, the commodities market is currently in a "super squeeze" state, and this situation could worsen if the Strait of Hormuz remains effectively closed. Analysts including Paul Bloxham stated in a report on June 1st that, "the longer the strait remains closed, the faster inventories will be depleted, making it more likely for certain commodity markets to reach a 'tipping point'." However, they added that accurately predicting when this situation will occur remains difficult. Raw material prices hit historic highs in mid-May, but then retreated as the U.S. intensified efforts to extend the ceasefire agreement with Iran. In addition to the Middle East region, HSBC's macro outlook also highlighted other factors favoring commodities, such as growth in consumption of basic metals like copper, and the approaching El Nio weather event which could affect crop supplies. Analysts indicated that the overall commodity cycle is still in what is called a "super bullish" phase, but this is very different from previous super cycles as it is driven by supply interruptions. They cited previous research from the bank, stating, "We have termed it a 'super squeeze' rather than a 'super cycle'."