A surge in energy and iron ore prices is offering investors a...

A surge in energy and iron ore prices is offering investors a fresh reminder of how the commodities market can fuel inflation and imperil the postpandemic economic recovery.

The price of West Texas Intermediate crude on Monday settled above $US80 a barrel for the first time since 2014. Aluminium futures rose to their highest since July 2008, leading broad gains among base metals. In China, coal futures surged to a record.

Iron ore, which tumbled after hitting a record in May, has posted dramatic gains, with futures contracts climbing 50 per cent in just three weeks on expectations some idled Chinese steelmakers will resume operations.

Iron ore in Singapore gained 10 per cent on Monday to $US136.95 a tonne, though it pared some of those gains in the early hours of yesterday.

Escalating concerns about tight fossil fuel supplies as the winter approaches in the northern hemisphere has led to a surge in the price of natural gas, coal and oil globally, rattling power generators and other end-users such as fertiliser producers.

A deepening power crisis is squeezing supplies of aluminium, an energy-intensive metal. That comes at a time when the cost of consumer goods is already under pressure from port bottlenecks, supply chain disruptions and labour shortages.

“It’s really the main theme that’s concerning everybody, the supply chain shortages exacerbated recently by the energy shortages, the energy price spikes,” Ed Meir, an analyst at ED&F Man Capital Markets, said.

“The inflation theme is very much with us, contrary to what the central banks are saying — it’s becoming very entrenched.”

The rally in oil has spurred the Biden administration to be more vocal about its concerns over high energy prices. Over the past few months, the White House has been in communication with OPEC, pushing the cartel to boost output while stressing the importance of affordable energy.

The Bloomberg Commodity Spot Index, which tracks 23 energy, metals and crop futures contracts, rose 0.2 per cent on Monday after hitting a record high last week.

The reopening of big economies has unleashed demand for transport fuel and all commodities used in manufacturing, just as new mining and oil projects have stalled, China is replenishing crop stockpiles and bad weather is hurting agricultural goods exporters.