Middle East conflict strengthens the bullish case for resource stocks, with gold miners, oil & gas and coal, aluminum, and copper all supported by supply constraints

Overview

This report is a JPMorgan Asia Pacific commodities sales note centered on whether there is a clear "exit path" from the Middle East conflict. The author argues that although the market has recently seen a rebound in risk appetite because the U.S. may exit the Middle East and the Strait of Hormuz may reopen, the facts still point to a meaningful probability of escalation. Based on that, the report lays out allocation ideas for gold miners, oil, gas and coal, aluminum, and copper stocks, emphasizing that supply disruptions, higher far-dated prices, low positioning, and valuation pullbacks in resource stocks are creating opportunities.

Core views

The core views are: first, gold miners are worth buying after a roughly 25% pullback, and remain supported over the long term by fiscal deficits, monetary suppression, central bank buying, and declining political trust; second, oil & gas and coal prices may stay higher for longer, with SPR replenishment, damaged LNG capacity, and low Asian inventories benefiting upstream and coal companies; third, the aluminum market faces a significant supply shock from damaged Middle East smelters, creating strong upside leverage in prices; fourth, copper is constrained by inventories, but Kamoa-Kakula and Chilean supply disruptions reinforce the medium-term tightness thesis; fifth, resource and energy weights in Asia Pacific within MSCI AxJ have fallen sharply, active funds remain underweight, and if the risk event persists, funds may be forced to rebuild positions.

Analysis framework

The report uses a top-down analysis of macro events and supply shocks, combining commodity futures curves, industry inventories, mine production guidance, smelter capacity losses, stock pullback magnitudes, valuation multiples, dividend yields, and institutional positioning data to screen for stocks that benefit from conflict escalation or long-term resource scarcity. Its focus is not traditional single-name earnings modeling, but rather trading and allocation cues derived from resource price elasticity, supply recovery cycles, underpositioning, and relative valuation.

Methodology notes

• Macro and commodity strategySupply shock pricing framework

  Assess commodity upside risk through war, port and smelter damage, mine output cuts, and LNG capacity interruptions.

  The report treats the Middle East conflict, damage to Qatar's LNG capacity, damage to EGA and Alba aluminum smelters, and the downward revision to Kamoa-Kakula copper output guidance as supply-side disruptions, and concludes that these disruptions will lift medium- and long-term price expectations for energy, aluminum, and copper.

• Equity allocationLow-positioning reversal framework

  When sector weights and active fund allocations are low, fundamental catalysts can trigger passive or active rebuilding of positions.

  The report notes that materials and energy weights in MSCI AxJ are only about 3.8% and 3.2%, respectively, with active funds still underweight by about 1.5%; therefore, if energy and metal prices keep strengthening, resource stocks may receive additional support from position rebuilding.

• Valuation and earnings leveragePrice sensitivity and re-rating framework

  Use the impact of oil, aluminum, and copper price changes on EPS, EBITDA, FCF yield, and valuation multiples to judge equity leverage.

  The report emphasizes that oil & gas stocks such as PetroChina, CNOOC, and Woodside have high earnings sensitivity to oil price changes, and also uses aluminum supply elasticity, copper production growth, dividend yield, and EV/EBITDA multiples to assess the attractiveness of resource stocks.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Gold miners: Zijin Gold, Newmont, Capricorn Metals, Aneka Tambang

  Benefiting from high gold prices, central bank buying, declining political trust, and reallocation opportunities after the miners' pullback.

  Strengths

  The long-term gold case remains intact, miner positioning has come down, and some companies offer production growth, high FCF yields, or dividend appeal.

  Weaknesses

  Previously affected by a stronger U.S. dollar, cost concerns from higher oil prices, and the unwinding of crowded trades.

  Comparison

  The report prefers Zijin Gold, Newmont, and Capricorn Metals for their production growth and low-cost advantages.

  Risks

  Continued U.S. dollar strength, rising real rates, higher oil prices lifting mine costs, or a pullback in gold prices.

• Oil & gas equities: PetroChina, ONGC, Woodside, PTTEP

  Benefiting from higher far-dated oil prices, SPR replenishment, LNG supply disruptions, and Asia's energy security needs.

  Strengths

  PetroChina sources only about 10% of its crude from the Middle East, while gas sales and earnings drivers are strengthening; Woodside is more sensitive to long-term LNG prices; PTTEP has upstream oil exposure and liquidity.

  Weaknesses

  ONGC is held back by concerns over India's windfall tax, and Woodside's balance sheet is weaker than Santos's.

  Comparison

  The report says PetroChina is one of the highest-quality oil & gas names in Asia Pacific, while ONGC has lagged its peers.

  Risks

  A quick reopening of the Strait of Hormuz, falling oil and gas prices, government tax intervention, or project execution risk.

• Coal equities: ITMG, Yankuang, Shenhua

  Benefiting from LNG and natural gas price correlation, as well as LNG capacity disruptions and Asia's energy substitution demand.

  Strengths

  ITMG has a dividend yield of about 16%, and quota-cut risk has eased; Yankuang has high exposure to spot thermal coal.

  Weaknesses

  Chinese coal price policy may limit upside for Yankuang, while Shenhua has a high share of long-term contracts and lower price leverage.

  Comparison

  The report is more constructive on ITMG, while Chinese coal stocks may underperform Asian peers because of price policy.

  Risks

  Recovery in gas supply, coal price intervention, softer energy demand, or environmental policy pressure.

• Aluminum equities: Chalco, Hongqiao, Adaro Minerals, Vedanta, South32, Alcoa

  Benefiting from damage to EGA and Alba smelting capacity, a long aluminum supply recovery cycle, and strong price elasticity.

  Strengths

  Chalco and Hongqiao have relatively low alumina revenue exposure, Adaro Minerals has no alumina exposure and is ramping capacity, and Vedanta has a de-rating/re-rating catalyst from a potential spin-off.

  Weaknesses

  South32 has relatively high alumina exposure, and some companies may be affected by costs, policy, or event-driven trading.

  Comparison

  The report mentions South32 as a vehicle to express an aluminum view, but Alcoa is more liquid and has more direct aluminum revenue exposure.

  Risks

  Middle East capacity losses below expectations, faster-than-expected smelter restarts, weak aluminum demand, or alumina cost volatility.

• Copper miners: Capstone Copper, Zijin Mining, Ivanhoe, MMG

  Benefiting from Kamoa-Kakula guidance cuts, weak Chilean output, and medium-term copper supply disruptions.

  Strengths

  Capstone Copper has fallen about 40% from its highs, still trades below NPV among the few names, and production could nearly double by 2029; Zijin Mining's guidance points to copper output of 1.5 to 1.6Mt by 2028; MMG trades at about 5x EBITDA and has growth.

  Weaknesses

  Copper inventories remain above 1Mt, and some investors are waiting for prices to approach $11,000 or for a clearer signal that Hormuz has reopened.

  Comparison

  The report says Capstone offers both discount and production growth, Zijin Mining is one of the most desired copper names for Hong Kong and China investors, and MMG is a cheaper growth name.

  Risks

  Persistently high copper inventories, faster-than-expected mine restarts, slower global demand, or weaker risk appetite.

Key data

• Gold miner pullbackAbout 25%The report argues that GDX and gold miners are attractive to buy on dips after pulling back from their highs, while gold prices remain above $4,500.
• JPM Asia Gold Miners basket position percentile12th percentile since 2018The report suggests that the unwinding of crowded trades in gold miners may be nearly complete.
• Zijin Gold earnings growth forecast2025 to 2028 production CAGR of about 25%, EPS CAGR of about 64%The report says Zijin Gold is trading at about 8x 2026 EV/EBITDA.
• Newmont medium-term production and cash flowFY26 about 5.3Moz rising to about 6Moz by FY29, average medium-term FCF yield of about 11%The report names Newmont as one of the top picks in its Australia coverage.
• Far-dated Brent price changeThe June 2028 price rises from about $65/bbl to about $75/bbl, an increase of roughly 13%The report believes this could lead to upward revisions to Asia Pacific E&P earnings.
• Qatar LNG capacity damageAbout 20% of global capacity severely damaged, with recovery taking at least 3 to 5 monthsThe report believes this event will support LNG prices and, through correlation, benefit coal stocks.
• ITMG dividend yieldAbout 16%The report says quota-cut risk has eased and LNG disruptions will keep coal demand elevated.
• Middle East aluminum capacity shockEGA and Alba together account for about 4% of the global aluminum marketThe report says that if large smelters are taken offline by damage, recovery could take 6 to 12 months.
• Aluminum price supply elasticityA 1% supply loss corresponds to about a 3% increase in LME pricesBased on this, the report estimates that a 4% Middle East supply loss could translate into about 12% upside for aluminum prices.
• Kamoa-Kakula copper mine production guidance290kt to 330kt in 2026, 380kt to 420kt in 2027Ivanhoe lowered production guidance, and the report estimates that 2026 copper supply will be cut by another roughly 100kt.
• Asia Pacific materials and energy weightsMSCI AxJ materials about 3.8%, energy about 3.2%The report says both are far below the roughly 18% peak seen in 2007 to 2011, and active funds remain underweight by about 1.5%.

Impact & implications

If the report is right, resource stocks may not just be a short-term war trade, but could enter a medium-term re-rating phase driven by supply constraints, inventory rebuilding, insufficient capital spending, and position rebuilding from low ownership. Gold miners are supported by safe-haven demand and structural declines in trust in fiat money; oil & gas and coal are supported by far-dated prices and LNG disruptions; aluminum is supported by the recovery cycle for smelting capacity; and copper may gain favor after inventories are worked down and mine disruptions plus limited production growth become more apparent. For investors, the key is not a single commodity direction, but selecting stocks with high earnings leverage, still-low valuations, limited policy overhang, and not-yet-crowded positioning.

Risks

• A quick de-escalation of the Middle East conflict or a smooth reopening of the Strait of Hormuz could weaken the risk premium in energy and metals.
• A stronger U.S. dollar, higher real rates, or tighter liquidity could weigh on gold and resource stock valuations.
• If oil, LNG, coal, aluminum, or copper prices fall, the earnings sensitivity of the related stocks could work in reverse.
• Taxation, price controls, and resource policy in markets such as India, China, or Australia could limit stock upside.
• Copper inventories are still high, and if demand recovery is insufficient, supply disruptions may not translate into price gains immediately.
• If smelters, LNG facilities, or mines recover faster than assumed in the report, the supply shock thesis will be weakened.

What to watch

• Progress in negotiations involving the U.S., Iran, and the IRGC, and whether the Strait of Hormuz truly returns to normal passage.
• The far-dated Brent curve, the pace of SPR replenishment, and whether 2026 to 2028 earnings assumptions for Asia Pacific upstream oil & gas companies are revised upward.
• Qatar LNG recovery timing, Asian LNG inventories, and the strength of coal-demand substitution.
• Actual aluminum output losses at EGA and Alba, restart timing, and whether LME aluminum prices approach or break the report's $4,000/ton scenario.
• Kamoa-Kakula, Grasberg, Chilean copper output, and changes in global copper inventories.
• Whether underweight positioning in MSCI AxJ materials and energy starts to rebuild, especially whether long-only funds move from watching to adding.
• Valuation, dividend yield, production guidance, and policy-risk changes for key stocks, including PetroChina, ITMG, Zijin Mining, Capstone Copper, Chalco, and Vedanta.