Brent crude surged past $101 a barrel for the first time since July, as escalating strikes across the Middle East fanned worries about further disruptions to energy supplies from the key producing region. Copper prices scaled record peaks in both London and New York, with traders weighing persistent tariff concerns and supply shortfalls against uncertainty over demand prospects stemming from heightened hostilities in the region. Gold pared its advance, as U.S. Treasury yields climbed after the Treasury Department announced it would expand its long-dated bond repurchase program to $6 billion, with the dollar briefly clawing back losses.
Oil: Brent Rises Past $101 on Escalating Iran Conflict Threatening Tankers
Brent crude surpassed $101 a barrel for the first time since July, with the intensifying wave of attacks in the Middle East amplifying concerns over further supply disruptions from this crucial oil-producing zone. The global benchmark settled over 3% higher in New York, while WTI approached $96 a barrel. Explosions and emergency alerts rang out across the region during the session, with Iran signaling readiness for a broader war and vowing to step up strikes against the United States. The conflict has disrupted petroleum shipments through the vital Strait of Hormuz shipping lane, though millions of barrels still move daily via tankers that have switched off tracking signals to hide their movements, which has somewhat capped the price advance. It remains unclear how the latest escalation might impact these so-called "dark fleet" operations.
Oil prices were already climbing earlier in the session. The U.S. military reported that Iran attempted to strike a U.S. Navy vessel with a ballistic missile overnight, prompting American forces to destroy five Iranian tankers in response. Iranian media claimed Tehran attacked two U.S. warships and eight tankers in the Persian Gulf. These particular incidents have yet to be independently confirmed, but the mutual strikes have intensified market worries about tightening supply in the region. The escalation comes as Iran-backed Houthi rebels in Yemen also target Saudi energy infrastructure. Southern Saudi Arabia issued a "potential hazard" alert on Wednesday, just a day after an attack on the area.
With the winter heating season approaching, the Iran war is lifting energy costs, with European natural gas prices hitting their highest levels since 2023. U.S. gasoline and diesel prices are also surging, posing a political risk for President Donald Trump's Republican Party ahead of the midterm elections. Trump forecast on Wednesday that the Iran conflict would conclude after the November vote and that gasoline prices would decline.
"The supply gap in the crude market has eased somewhat as higher volumes of 'dark fleet' shipments stabilize, but overall the market remains tight," said Ryan McKay, senior commodity strategist at TD Securities. "With fresh waves of attacks and growing signs of more aggressive buying in the market, supply could tighten further."
Brent has climbed about 65% so far this year. However, apart from a brief spike in July, futures had traded below $100 a barrel for over three months as Gulf producers managed to boost exports. Technical factors have also amplified the rally. Data from Kpler's Bridgeton Research Group shows trend-following commodity trading advisors have increased long positions, with Brent and WTI longs now at 91% each, compared to 45% and 36% respectively on August 31. Such programmatic traders often exacerbate price swings.
On the other hand, refined products like diesel have seen a much sharper run-up, as the Middle East conflict alongside the Russia-Ukraine war tightens supply. This could usher in a fresh wave of inflationary cost pressures for global central banks. "The fundamentals for refined products remain bullish, with global inventories and reserves declining," said Darrell Fletcher, managing director of commodities at Bannockburn Capital Markets.
WTI settled 3.3% higher at $96.05 a barrel, while Brent rose 3.4% to settle at $101.21 a barrel.
Copper Hits Record Peaks in New York and London
Copper prices reached fresh all-time highs on both the London Metal Exchange and in New York. Traders are balancing ongoing tariff worries and supply shortages against uncertainty over demand prospects due to heightened Middle East hostilities. The benchmark three-month copper contract on the LME climbed as high as $14,858.50 a metric ton, surpassing the previous record of $14,779 set a day earlier. Over the past three sessions, copper has set consecutive records. COMEX copper also rose to a record high of $6.894 per ounce.
Copper is up 19% this year, supported by a long-term supply-demand imbalance. Aging mines are increasingly struggling to meet growing demand from data centers, renewable energy, and power grids, a trend bullish investors have highlighted for years. Meanwhile, in the latest round of conflict, the U.S. said it struck additional Iranian tankers overnight in response to actions by Iran's Islamic Revolutionary Guard Corps against a U.S. vessel. Brent's move above $100 a barrel added to inflation concerns ahead of Friday's U.S. consumer price data.
A report from Guangzhou Futures posted on social media cautioned that "on the macro level, caution is still warranted, as U.S. inflation remains uncertain, and shifts in expectations for Fed policy could exert downward pressure on copper prices."
LME copper rose 0.4% to $14,767.50 per ton; LME aluminum added 0.5% to $3,357 per ton; LME nickel gained 0.2% to $16,897 per ton; LME zinc climbed 0.8% to $4,052.50 per ton; LME tin advanced 0.7% to $55,218 per ton; and LME lead was roughly flat at $1,914.50 per ton.
Gold Trimmed Gains as Yields Rise Post U.S. Treasury Buyback Announcement
Gold's advance narrowed after U.S. Treasury yields rose in the wake of the Treasury Department's announcement to expand its long-dated bond repurchase program to $6 billion, which briefly helped the dollar recoup losses. Bullion was up 0.9% after earlier rising as much as 1.8%. Following the U.S. government's announcement, Treasuries extended their decline, suggesting the buyback size came in below some investor expectations.
The dollar briefly regained ground. Higher interest rates and a stronger dollar typically weigh on gold, as the metal pays no interest and is priced in the U.S. currency. At the same time, fresh attacks in the Middle East pushed benchmark oil above $100 a barrel, with rising energy prices bolstering the case for a Fed rate hike at next week's meeting, another drag on non-yielding gold. Swap traders currently price in a 61% probability of a rate increase at the Fed's next gathering.
"The fact that gold has not fallen on higher oil prices and a softer dollar has been enough to force some intraday short covering," said Ole Hansen, head of commodity strategy at Saxo Bank. He noted that "there is no new catalyst visible at the moment, and traders remain cautious" ahead of the consumer price index and producer price index readings due later this week. Those inflation figures could provide further clues on the Fed's next move.
At 4:54 p.m. in New York, spot gold was up 1% at $4,400.06 an ounce, while silver added 2.3% to $67.271 an ounce.
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