Commodity markets have always been cyclical, but their rhythm is changing. According to McKinsey’s latest analysis, the traditional long commodity supercycle is giving way to a shorter, more frequent volatility wave.



The result is a structural reshaping of trading strategies, investment priorities, and even the industry’s competitive landscape.



A few signals point to the shift. Industry value pools remain roughly twice as large as pre-COVID levels, yet they have cooled from the extraordinary highs of 2022 and 2023. In 2025, global commodity-trading EBIT slipped slightly to about $69 billion, down from $72 billion the year before.



“There is a new normal in commodity trading,” the report notes, as structural pressures build beneath the surface even while headline margins appear relatively stable.



The change isn’t simply cyclical cooling. It reflects a deeper reconfiguration of commodity markets driven by geopolitics, energy-system shifts, and rapid technological advances.



<h2>The Geopolitical Factor </h2>



McKinsey sees geopolitics as one of the biggest structural forces behind the cycle shift. As commodities become an increasingly important part of national strategies, priorities change.



Trade relationships that once operated under relatively stable multilateral frameworks fragment into more interest-based alliances. Governments seek greater control over critical commodities, particularly those tied to energy security or energy transition.



That shift is already reconfiguring flows of oil, gas, and minerals. Supply diversification often requires new infrastructure—from LNG terminals to mining capacity—which can take years to build. When disruptions occur, prices react sharply because supply chains cannot adjust quickly.



Per McKinsey, access to commodities is “increasingly seen as critical to staying competitive on the national level.” And that dynamic is a source of volatility.



<h2>Non-Linear Energy Transition</h2>



Evolving energy transition is the second structural force. The decarbonization trend is reshaping demand patterns across commodities. Anything from hydrocarbons to transition metals such as copper, lithium, and nickel is fair game.



Yet, the transition is far from linear. Governments must balance the competing priorities of affordability, security, and sustainability—what analysts increasingly describe as an energy “quadrilemma.”



As a result, fossil fuels may remain a larger part of the energy mix for longer than previously expected, even as investment in renewables continues. Uncertainty about future energy systems is producing uneven supply and demand cycles, amplifying market volatility.



Price Watch: Invesco Global Clean Energy ETF (NYSE:PBD) is up 7.71% year-to-date.



<h2>AI Acceleration  </h2>



The third structural shift is technological. Traders are rapidly adopting advanced analytics and leveraging AI to improve decision-making and operational efficiency.



The potential impact is substantial. Early deployments suggest that AI-driven automation could reduce parts of the deal lifecycle workload by 20–40%, while some industry participants believe total cost reductions could eventually reach 60% or more.



In essence, faster and cheaper work equals faster deal timelines. What used to take months may now take weeks. Everything accelerates.



These shifts are playing out unevenly across regions. North America and Asia are expected to capture much of the growth in trading capability and value creation, particularly in oil and LNG markets. Europe, by contrast, has seen softer results in power trading and tighter balance sheets among some energy majors.



Meanwhile, new players—from hedge funds to national oil companies—are entering the trading arena, intensifying competition and accelerating consolidation.



In January, McKinsey surveyed more than 150 commodity traders. Roughly 80% of respondents identified access to capital and advanced trading sophistication as the most critical success factors, while many expect trading houses, financial players, and U.S. oil majors to outperform in the coming years.



Commodity cycles aren’t disappearing, but changing. The rise in geopolitical influence, complexity, and acceleration has evolved the game.



Big capital, which is traditionally late to the pitch, will have to adjust to this new pace.



Photo via Shutterstock

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Commodity markets are experiencing a structural reshaping due to geopolitical forces, energy transition, and technological advancements. McKinsey's analysis indicates a shift from long commodity supercycles to shorter volatility waves, with global commodity-trading EBIT declining slightly to $69 billion in 2025. Geopolitics is reshaping trade relationships, while the energy transition creates uneven demand patterns. Technological advancements, particularly AI, are enhancing trading efficiency. The competition is intensifying as new players enter the market, and traditional capital must adapt to the evolving landscape.

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