Crude oil prices edged higher as traders weighed the threat of increased US economic pressure on Iran. Copper prices rose on signs of further tightening in supply. Gold recovered as the latest inflation data dampened expectations of Federal Reserve interest rate hikes.
Crude Oil: Prices Rise as US Threatens Greater Economic Pressure on Iran
Oil prices edged higher as traders assessed the threat of the US imposing greater economic pressure on Iran. Brent crude settled above $88 per barrel, gaining approximately 6% for the week. US Treasury Secretary Bessent told Newsmax that the US will apply "unprecedented" economic pressure on Iran, stating that more announcements will be made next week. As Washington pressures Tehran to reopen this key energy transport route, Bessent also indicated the US will maintain its naval blockade of Iranian ports. Crude oil futures have risen more than 40% year-to-date as the war disrupts production and exports from major Persian Gulf OPEC producers. The International Energy Agency this week projected a widening supply deficit for the current quarter and also predicted the deficit in 2026 would be the largest in five years. Iran has been negotiating with Oman to reopen the Strait of Hormuz, but no agreement has been reached so far. With negotiations on a deal at a standstill, traders are reassessing just how much oil is actually transiting the Strait of Hormuz. US Energy Secretary Wright told Fox News that the US military's ability to escort ships through the strait is increasing, allowing for higher oil transport volumes. TP ICAP Group Plc energy expert Scott Shelton noted that oil flow through the Strait of Hormuz may be higher than initially expected by the market, suggesting that this week's price rally reflects more of a risk premium than a further tightening of fundamentals. WTI for September delivery rose 1.4% to settle at $82.40 per barrel. Brent for October delivery rose 1.7% to settle at $88.52 per barrel.
Base Metals: Copper Prices Rise on Tightening Supply
Copper prices rose on signs of further tightening in supply. The spot price of copper on the London Metal Exchange (LME) is trading significantly higher than futures contracts, forming a backwardation structure, a classic sign of an intensifying supply squeeze. LME copper inventories fell for the 42nd consecutive trading day on Friday, the longest streak of declines since 2014. By the close, LME copper rose 0.1% to $14,160 per tonne. LME aluminium fell 0.2% to $3,252 per tonne. LME nickel rose 0.2% to $16,815 per tonne. LME zinc rose 0.1% to $3,756.5 per tonne. LME tin rose 0.6% to $56,194 per tonne. LME lead rose 0.4% to $1,895 per tonne.
Precious Metals: Gold Rebounds from Profit-Taking
Gold rebounded from earlier profit-taking, holding steady above $4,300 per ounce. With mild US inflation data, investors are weighing the potential direction of US monetary policy. The consumer price index showed that the energy price shock from the Iran war had a diminished impact on inflation in July, easing pressure on the Federal Reserve to adopt more aggressive monetary policy. "Gold appears to be catching its breath after a strong rally, with traders taking some profits," said Hebe Chen, senior analyst at Vantage Markets. "The rise to two-month highs naturally gave investors a chance to lock in gains." As of 4:17 p.m. Eastern Time, spot gold rose 0.5% to $4,373.65 per ounce. Spot silver rose 0.3% to $64.6904 per ounce.
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