Amid escalating trade tensions between the United States and China, Beijing has halted shipments of seven critical rare earth elements, invoking national export control laws.
These laws now require opaque and lengthy licensing processes.The move, which affects vital materials like yttrium, dysprosium, and terbium, threatens to choke global supply chains in defense, automotive, and clean energy sectors.
The export restrictions, widely seen as a direct counter to Washington’s sweeping tariffs, have already paralyzed cargo flows. Chinese traders report export delays of at least 60 days, with the potential to extend much longer. Some suppliers have declared force majeure to avoid breach of contract penalties, underscoring the seriousness of the disruption.
China currently dominates the global rare earth market, producing about 90% of the world’s supply. Analysts warn that this monopoly gives Beijing powerful leverage, but it also risks long-term consequences. Buyers are now accelerating efforts to diversify supply sources — a development that could diminish China’s market share over time.
Kevin Hassett, Director of the U.S. National Economic Council, acknowledged the threat, stating that rare earths “are a part of lots of the economy,” and emphasized that the administration is examining the situation “very carefully.”
Shares of MP Materials (MP), the sole operator of a rare earth mine in the United States, surged nearly 20% in response. However, the company itself remains exposed—selling rare earth concentrate primarily to Chinese buyers. Investors are bullish, but analysts warn that the situation is fluid and high-risk. The market is watching closely for any executive orders related to strategic reserves, which could significantly alter the landscape for domestic rare earth supply chains.
Crude Reality: Oil Faces Oversupply Crisis Amid Trade Uncertainty
While rare earth markets tighten, the oil sector is contending with the opposite problem: a mounting glut. Goldman Sachs (GS) forecasts a crude surplus of 800,000 barrels per day in 2025, expanding to 1.4 million barrels daily in 2026. The combination of sluggish demand and the easing of OPEC+ production cuts has left prices sagging near four-year lows.
Global demand for crude is expected to rise by just 300,000 barrels per day this year — a steep drop from earlier projections. The slowdown is most evident in petrochemical feedstocks, which have been hit hard by trade policy uncertainty and slowing industrial output.
Oil prices have slid by 13% year to date. Brent crude hovered at $64.87 a barrel this week, down from $80 in January. Analysts at GasBuddy noted that, while lower gasoline prices may benefit consumers in the short term, the underlying weakness in crude suggests growing fears of a global economic slowdown.
Patrick De Haan, head of petroleum analysis at GasBuddy, remarked, “This isn’t COVID or the Great Recession, but the sharp drop in oil is flashing warning lights for the broader economy.” He added that the “drill, baby, drill” push may falter as extraction becomes economically unfeasible in certain U.S. shale regions.
Golden Resurgence: Precious Metal Breaks Records as Investors Flee to Safety
As rare earths tighten and oil falters, gold is surging — and fast. Spot prices touched new highs above $3,245 per ounce this week, and Goldman Sachs now expects the metal to climb to $3,700 by year-end, hitting $4,000 by mid-2026. UBS has also upgraded its outlook, targeting $3,500 by the end of next year.
Gold’s rally has been fueled by an explosive mix of central bank buying, geopolitical risk, and waning confidence in U.S. assets. The Dollar Index broke below 100, and long-dated U.S. Treasuries — traditionally safe havens — have seen sell-offs, forcing investors to recalibrate.
According to Goldman, official-sector gold purchases are now averaging 80 tons per month, while ETF inflows are accelerating amid fears of recession and stagflation. “The new highs in gold are signaling a shift in appetite for U.S. assets,” said Ryan McIntyre of Sprott, a precious metals-focused asset manager. “Confidence in the U.S. has clearly been shaken.”
With the Federal Reserve expected to pivot toward rate cuts later this year, and policy uncertainty continuing to cloud economic prospects, gold’s momentum shows little sign of slowing. Analysts point to limited mine supply, increased investor diversification, and growing geopolitical risks as additional tailwinds for bullion.
Conclusion
The global commodities landscape is undergoing seismic shifts. Rare earth exports are gridlocked, oil markets are awash in oversupply, and gold is skyrocketing amid deepening uncertainty. As trade disputes between the world’s two largest economies harden into long-term rifts, investors, producers, and policymakers alike are being forced to reorient in a dramatically changing environment.
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