Oil prices recorded their largest single-day gain since early May on Monday as traders grew concerned about potential new restrictions on energy supplies from the Middle East. Copper prices rose in both New York and London as a key deadline approached for the Trump administration to decide on potential import tariffs. Gold prices fell, with reports that Iran would halt information exchanges with the U.S. casting a shadow over the prospects for a Middle East ceasefire.
**Oil: Prices Jump as Traders Weigh Fresh Threats to Middle East Supply**
Crude oil prices posted their biggest gain since early May on Monday, driven by trader fears of further potential constraints on energy supplies originating from the Middle East.
Brent crude settled near $95 a barrel on Monday, having earlier breached $97, after Iran's semi-official Tasnim news agency reported that Iran would suspend talks with the United States in protest of Israel's expanded ground offensive in Lebanon.
Tasnim also noted that the Iran-backed "Axis of Resistance" was considering a blockade of the Bab el-Mandeb Strait at the southern end of the Red Sea. This waterway has served as a crucial alternative route for oil to reach global markets while the Strait of Hormuz remains largely obstructed.
These fresh concerns over supply disruptions come as the global oil market is already experiencing one of the most severe supply outages in history. Oil industry experts have informed OPEC+ that the supply shock from the closure of the Strait of Hormuz will persist until year-end, even if the strait reopens swiftly.
Market gains were partially pared back after U.S. President Trump stated that negotiations with Iran were "moving quickly." Trump also indicated that Israel and Hezbollah had agreed to halt attacks on each other in Lebanon, a condition Iran had earlier stated was indispensable for any agreement.
"If the market begins to believe that oil flows currently being diverted through the Bab el-Mandeb Strait are at risk, the degree of supply tightness is likely to be significantly repriced," said Rebecca Babin, Senior Energy Trader at CIBC Private Wealth Group.
"The impetus to continue negotiations appears to be coming more from the Trump administration than from the Iranian side. The next step could be some form of weakened 30-day ceasefire, which at best would be fragile," said Karen Young, Senior Research Scholar at Columbia University's Center on Global Energy Policy.
WTI crude for July delivery rose 5.5% to settle at $92.16 a barrel in New York.
Brent crude for August delivery gained 4.2% to settle at $94.98 a barrel.
**Base Metals: Copper Extends Gains Amid Tariff Uncertainty and Tight Supply**
Copper prices advanced in New York and London, kicking off a crucial month as a key deadline for the Trump administration to decide on launching import tariffs drew near.
The U.S. Secretary of Commerce must submit updated recommendations to President Donald Trump on refined copper import tariffs by June 30. Ahead of this decision, the premium for copper in the U.S. market relative to global prices has widened again, prompting a significant redirection of metal flows to U.S. ports.
This trend, combined with other supportive factors, helped push copper prices approximately 5% higher for the month of May. Concurrently, efforts by the U.S. and Iran to advance ceasefire talks have improved sentiment in the industrial metals market, while the investment fervor around artificial intelligence assets has also spilled over into the copper market.
At the close, LME copper rose 1.4% to $13,832 per metric ton.
LME aluminum increased 1.4% to $3,716 per ton.
LME nickel gained 1% to $19,251 per ton.
LME zinc advanced 1.1% to $3,578 per ton.
LME tin climbed 2.2% to $56,649 per ton.
LME lead declined 0.5% to $2,006.5 per ton.
**Precious Metals: Gold Declines**
Gold prices fell as reports that Iran would stop exchanging information with the U.S. clouded the outlook for a Middle East ceasefire.
Spot gold dropped as much as 2% as Treasury yields and the U.S. dollar strengthened. According to Iran's semi-official Tasnim news agency, Iran's negotiation team will suspend "dialogue and document exchange work with the U.S. through intermediaries" in response to the expansion of Israel's ground offensive in Lebanon.
"Gold typically performs best during financial or economic shocks that lead to a weaker dollar and lower real yields," said Ole Hansen, Head of Commodity Strategy at Saxo Bank. "The current inflation shock, driven by energy factors, is having the opposite effect, pushing up bond yields and the dollar while reducing expectations for interest rate cuts, which is negative for gold."
As of 6:18 p.m. New York time, spot gold was down 1.2% at $4,484.98 per ounce.
Spot silver declined 0.6% to $74.8403 per ounce.
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