Crude Oil prices fell to their lowest point in over three weeks, driven by rising expectations that the Strait of Hormuz will soon reopen. Copper climbed to its highest level since mid-May, with traders closely monitoring a surge in U.S. copper inventories and a pending decision on U.S. copper tariffs. Gold gained ground as indications of a potential de-escalation in the Middle East helped ease inflation concerns.
Crude Oil: Brent Drops Below $80 Amid Optimism for Hormuz Reopening
Oil prices slid to a more than three-week low, bolstered by growing optimism that the U.S. and Iran are nearing an agreement to reopen the Strait of Hormuz. Brent crude fell 5.3%, settling near $79 per barrel, its lowest level since July 10. The market is factoring in that a potential interim deal between the U.S. and Iran could help restore normal commercial shipping through the Strait of Hormuz and prevent further escalation of the conflict. "The market has been repricing risk based on the expectation of resumed crude oil transport, rather than focusing on the specific conditions needed to achieve this goal," said Rebecca Babin, Senior Energy Trader at CIBC Private Wealth Group. Mike Sommers, CEO of the American Petroleum Institute, said in a Tuesday interview that approximately 7 million barrels of crude oil per day pass through the Strait of Hormuz, a figure well below pre-conflict levels. Diplomatic sources indicated that Iran is considering allowing European nations to participate in mine-clearing operations in the Strait, a significant softening of Tehran's earlier insistence that foreign nations be excluded from such efforts. U.S. Treasury Secretary Scott Bessent stated on Tuesday that a deal to reopen the Strait could be reached within the next day or two. Several technical factors also amplified the decline. According to data from Kpler's Bridgeton Research Group, trend-following commodity trading advisors reduced their long positions in Brent crude to 36%, down from 73% at the start of Tuesday's trading session. September-delivery WTI crude fell 5.7% to settle at $75.77 per barrel, while October-delivery Brent crude declined 5.3% to settle at $79.36 per barrel.
Base Metals: Copper Hits Highest Since Mid-May
Copper prices rose to their highest level since mid-May, breaking above $14,000 per metric ton. Traders continued to focus on a sharp increase in U.S. copper inventories and President Donald Trump's decision regarding copper tariffs. Copper futures on the London Metal Exchange (LME) rose for a second consecutive session, adding to a 3.1% gain in July. LME warehouse copper inventories fell to a five-month low. At the close, LME copper was up 1.4% at $14,066.5 per metric ton; LME aluminum was roughly flat at $3,223 per metric ton; LME nickel rose 0.8% to $17,193 per metric ton; LME zinc gained 0.9% to $3,673.5 per metric ton; LME tin climbed 1% to $55,989 per metric ton; and LME lead advanced 1.6% to $1,896 per metric ton.
Precious Metals: Gold Gains on Easing Inflation Worries
Gold advanced, supported by expectations of a potential interim agreement to reopen the Strait of Hormuz. This development helped ease inflation concerns, prompting traders to reduce bets on a Federal Reserve rate hike. Gold traded near $4,080 per ounce. The likelihood of a U.S.-Iran interim deal focused on the Strait of Hormuz appears to be increasing, with Qatar stating a proposal has been drafted and U.S. officials expressing optimism about reaching an agreement to restore traffic along the critical waterway. "The hope of a U.S.-Iran deal, combined with diminished concerns about broader economic risks, has boosted precious metals prices," said Ryan McKay, Senior Commodity Strategist at TD Securities. As of 5:00 p.m. Eastern Time, spot gold rose 0.6% to $4,077.99 per ounce, while spot silver gained 2.4% to $59.5545 per ounce.
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