News of the Strait of Hormuz reopening helped ease supply concerns, leading to a sharp decline in crude oil and a drop in aluminum prices. Gold prices advanced, influenced by a weaker US dollar and lower Treasury yields.
Crude Oil and Gas: Energy prices fell significantly due to the opening of the Strait of Hormuz and hopes for a ceasefire. Both crude oil and European natural gas prices dropped sharply as reports of the strait reopening boosted market optimism that the US-Iran conflict might be nearing an end. Brent crude fell 9.1%, settling around $90 per barrel, erasing most of its gains since the outbreak of the Iran war. WTI crude dropped to near $84 per barrel. The European benchmark natural gas price fell by as much as 10%, settling at approximately €39 per megawatt-hour. The decline in energy prices followed Iran's announcement that it would open the Strait of Hormuz during a 10-day ceasefire between Israel and Lebanon's Hezbollah. Iranian Foreign Minister Araghchi stated on platform X that the waterway is now "fully open" to commercial shipping. "The market is now pricing in an end to the war and the end of the strait's closure," said Arne Lohmann Rasmussen, Chief Analyst at Global Risk Management. "However, we note that it is currently only open to vessels sailing along the Iranian coastline, so it may not be entirely open yet." Friday's price movements bolstered optimism that the seven-week-long conflict, which had caused one of the most severe global energy supply disruptions in recent years, might be drawing to a close. Meanwhile, in the crude oil market, trend-following Commodity Trading Advisors (CTAs) have substantially reduced their long positions. Data from Bridgeton Research, part of Kpler, showed that long positions in Brent crude fell to 27% on Friday, down from 82% at the start of the trading session. US President Trump stated that Iran has agreed to suspend its nuclear program indefinitely and indicated that negotiations for a lasting agreement "could" take place this weekend. May WTI crude fell 11.5%, settling at $83.85 per barrel. June Brent crude fell 9.1%, settling at $90.38 per barrel.
Base Metals: Aluminum prices declined after Iran announced the Strait of Hormuz was open to freight, a move expected to aid exports from major producers Bahrain, Saudi Arabia, and the UAE. London aluminum fell 2.2% on Friday, closing at $3,564.50 per tonne, its lowest level since April 14th. Despite this, aluminum still posted a weekly gain of 1.9%, marking its fourth consecutive weekly increase. The price of this light metal, widely used in automobiles and beverage cans, had previously surged due to export disruptions in the Middle East. Closing prices for other metals were as follows: LME copper rose 0.6% to $13,347 per tonne; LME nickel fell 0.7% to $18,117 per tonne; LME zinc rose 0.6% to $3,446 per tonne; LME tin rose 1.2% to $50,695 per tonne; LME lead rose 0.5% to $1,962 per tonne.
Precious Metals: Gold prices climbed to a near one-month high following Iran's announcement regarding the opening of the Strait of Hormuz. Gold initially rose by as much as 2.1% before paring some gains. A weaker US dollar and lower bond yields typically support gold, as the metal is priced in dollars and does not offer interest. The Middle East conflict had raised concerns that soaring oil and gas prices could drive inflation higher, potentially leading central banks to delay interest rate cuts or even hike rates, which is unfavorable for gold prices. "Since the war began, gold has moved inversely to oil prices and the dollar, while showing a positive correlation with risk assets. Therefore, any news related to peace introduces upward momentum," said Nicky Shiels, Head of Metals Strategy at MKS PAMP SA. As of 4:27 PM Eastern Time, spot gold was up 1.1% at $4,845 per ounce, and spot silver was up 3.5% at $81.1342 per ounce.
Comments