Few markets are so global and interconnected in their fundamentals as commodities. Tensions over Iran and the strength of demand in Asia drive oil prices higher, which in turn fuels investment in Brazilian bio-ethanol as an alternative energy source.
But few markets are so localised in their specifics. While the price of the latest fad technology stock is the same the world over, the spread between UK Brent and US WTI benchmark oil prices has rarely been wider, as production and consumption patterns vary by country. This presents banks with strategic dilemmas for the commodities business. It is clear that Asian markets represent a substantial growth opportunity, but exploiting that opportunity is not straightforward.