Oil prices climbed on Wednesday amid ongoing uncertainty over US-Iran peace talks, with both sides leveraging a blockade of the Strait of Hormuz to gain negotiating leverage. However, gold prices and London-traded base metals also advanced, buoyed by the extension of the ceasefire.
Crude Oil: Prices Rise as US-Iran Peace Deal Prospects Remain Murky Crude oil prices increased on Wednesday as peace negotiations between the United States and Iran reached a stalemate, with each side using a blockade of the critical Strait of Hormuz to strengthen their position. Amid conflicting reports about resuming talks, Brent crude futures settled above $101 per barrel, reaching their highest level in two weeks. Washington and Tehran remain deadlocked on several key issues, including nuclear concerns and Israel's incursion into Lebanon. The UK Maritime Trade Operations, which liaises with the shipping industry, reported that Iranian gunboats fired on a cargo ship and a container vessel in the Strait of Hormuz on Wednesday. Transit through the strait remains nearly halted; under normal circumstances, the waterway handles about one-fifth of global crude shipments. US President Trump extended the ceasefire with Iran indefinitely but maintained a maritime blockade on vessels entering or leaving Iranian ports to maintain pressure on the Iranian government—a development also viewed as supportive for oil prices. Traders also closely monitored key inventory data released by the US Energy Information Administration on Wednesday. The data showed declines in stocks across all major refined product categories. Global markets have been relying on US supplies to offset disruptions in the Middle East. The EIA stated that rising export demand pushed total exports of crude and refined products to a record high. “Our base case is evolving to reflect a slower return to normal shipping flows in the Persian Gulf by mid-May, rather than the previously anticipated improvement by the end of April,” analysts at Société Générale noted. This shift alone is prompting the bank to consider raising its year-end Brent forecast from $79 to $85 per barrel. “Even so, this adjusted outlook may still underestimate the difficulty and time required for normalization, particularly given the scale of disruptions and constraints related to shipping, insurance, port damage, and debris clearance.” June WTI crude rose 3.7%, settling at $92.96 per barrel. June Brent crude increased 3.5%, closing at $101.91 per barrel.
Base Metals: Extended Truce Boosts Metal Prices Following President Trump's extension of the ceasefire with Iran, copper and aluminum prices on the London Metal Exchange moved higher, even as the prospect of a peace agreement remained distant. After failing to hold a new round of talks, the US and Iran have become embroiled in a struggle for control of the Strait of Hormuz, with both sides using the waterway's blockade to gain leverage during the prolonged truce. LME copper rose 1.5% to close at $13,433 per metric ton. Aluminum prices advanced 1.6%. The impact of the conflict on metal markets has been mixed. An unprecedented energy shock is reverberating throughout the economy, putting overall metal demand at risk. However, the de facto closure of the Strait of Hormuz has supported aluminum prices by preventing exports from Middle Eastern producers, who account for 9% of global supply. Goldman Sachs indicated that approximately 11% of global copper supply, concentrated mainly in Chile and the Democratic Republic of Congo, faces risks from sulfuric acid shortages.
At the LME close: LME copper rose 1.5% to $13,433/t. LME aluminum increased 1.6% to $3,613.5/t. LME nickel climbed 1.3% to $18,462/t. LME zinc gained 0.8% to $3,470/t. LME tin advanced 1% to $50,422/t. LME lead was largely unchanged at $1,964/t.
Precious Metals: Gold Rebounds After Two-Day Decline Gold prices rose on Wednesday, reversing a two-day losing streak, after President Trump extended the ceasefire with Iran and allowed more time to arrange a new round of negotiations. The metal climbed as much as 1.1% during the session but gave up most of those gains during US trading hours. Oil prices also rose on Wednesday, with Brent crude trading around $100 per barrel. The US Dollar Index declined 0.2% after rising in the previous session, providing a lift to dollar-denominated gold. “Gold ETF inflows have continued to recover over the past three weeks, allowing prices to maintain a steady advance since the sell-off in March,” wrote analysts at BMO Capital Markets in a Wednesday report. However, they noted that upward momentum had slowed over the past week, with signs emerging that selling pressure could arise in Asian markets if prices approach approximately $4,850.
As of 3:30 PM New York time: Spot gold rose 0.5% to $4,743 per ounce. Spot silver advanced 1.3% to $77.72 per ounce.
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