Crude, Methanol Surge on Iran-Israel Conflict; Trump Adds Fresh Momentum

Recent weeks have seen significant shifts in methanol prices, largely influenced by escalating geopolitical unrest in the global market.

Between 31st May 2025 and 22nd June 2025, CFR China methanol prices, quoted from the Middle East, rose sharply from $254/MT to $303/MT, marking a 19.29 per cent increase. This surge was triggered by the sudden escalation of conflict between Israel and Iran on 13th June 2025, which raised concerns over supply security from the region a key production and export hub for methanol.

However, following the announcement of a ceasefire, market conditions began to normalise. From 22nd June to 12th July 2025, prices retreated to $272/MT, reflecting a 10.56 per cent decrease, as supply chain concerns eased and buyer confidence returned to the market.

Oil Surge on July 14, 2025
The recent surge in WTI crude prices, triggered by President Donald Trump’s outspoken support for Ukraine and opposition to Russia, has created fresh volatility across global energy and chemical markets. As methanol production is closely linked to natural gas and oil-based feedstocks, the rise in crude prices has elevated production costs, especially in regions dependent on oil and gas. Additionally, logistical uncertainties and speculative buying have contributed to short-term price firming. With geopolitical tensions intensifying, global methanol buyers are adopting a cautious stance, reassessing inventory strategies and contract positions in anticipation of further market disruptions.

Global Crude Oil Market
The methanol market remains highly sensitive to fluctuations in crude oil prices, owing to its close feedstock connection with natural gas and oil derivatives. Regions with abundant oil reserves heavily influence upstream costs, ultimately affecting methanol prices across global markets.

The Middle East stands out as the most strategically important region, housing some of the world’s largest oil reserves. Major contributors are Saudi Arabia, Iran, Kuwait, and the United Arab Emirates (UAE). Their combined production capacity and geopolitical relevance make this region a cornerstone of global energy supply.

In North America, Canada and the United States play dominant roles. Canada holds extensive oil sands resources, whereas the United States remains a frontrunner in shale oil output and sustains sizable strategic petroleum reserves.

South America is represented by Venezuela, which holds the largest proven oil reserves globally, although political instability and infrastructure challenges have impacted its output.

North Africa features Libya, home to the continent’s largest proven oil reserves. Despite facing internal challenges, Libya remains an influential player in the Mediterranean energy market.

These regions collectively shape the global energy landscape and directly impact feedstock pricing for methanol, particularly during periods of geopolitical disruption or policy shifts affecting crude oil flows.

Geopolitics Driving Market Volatility

• Methanol prices surged following the Iran-Israel conflict, peaking due to supply concerns, then gradually declined as tensions eased.
• Crude oil prices rose again after political statements by US President Trump, reigniting volatility across energy markets.
• The linkage between oil and methanol pricing remains strong, with cost pressures felt across production and procurement chains.
• Buyers are closely monitoring geopolitical developments, adjusting strategies to manage ongoing price fluctuations and supply risks.

If Trump’s stance influences policy or sanctions, market volatility may intensify further; if it doesn’t materialise into action, prices may stabilise over time.