Supply risks in the oil market intensified due to conflicts in the Middle East and the war in Ukraine, pushing Brent crude to its highest level since early June on Tuesday. Gold and silver advanced, driven by bargain-hunting. Signs of tightening supply propelled copper prices to a more than one-month peak.
Crude Oil: Prices Rise Amid Supply Disruption Risks from Hormuz to the Red Sea and Russia
Brent crude oil climbed to its highest point since early June on Tuesday as traders assessed threats to maritime transport, ranging from the Strait of Hormuz and the Red Sea to a key Kazakh oil export terminal on the Russian coast.
The global benchmark Brent rose 2%, settling around $91 per barrel. This followed a tenth consecutive day of U.S. airstrikes against Iran after former President Donald Trump vowed Iran would pay for the deaths of American soldiers. Another vessel carrying oil products was also attacked, highlighting Iran's resolve to block tankers from transiting the Strait of Hormuz.
Simultaneously, Yemen's Houthi group threatened to block maritime traffic for Saudi Arabia in the Red Sea, adding another layer of risk to oil supplies from OPEC's largest producer. The Houthis sent emails to shipowners advising against calling at Saudi ports, and at least three oil tankers have already turned around in the southern Red Sea.
Scott Shelton, an energy specialist at TP ICAP Group, suggested that if tensions persist for several more weeks, Brent crude could surpass $100 per barrel.
Goldman Sachs Group outlined a more severe scenario: Brent could exceed $120 per barrel by the fourth quarter if supply disruptions continue, though this is not the firm's base case. Currently, Goldman forecasts Brent at $80 per barrel for the year's final quarter, though the Houthi threat introduces upside risk to that projection.
Beyond the Middle East, supply disruptions also occurred after a series of attacks on the Caspian Pipeline Consortium oil terminal on Russia's Black Sea coast. This terminal handles most of Kazakhstan's oil exports; the Central Asian nation exports nearly 1.8 million barrels of crude per day at times, making it a significant global exporter.
Gasoline and diesel futures edged higher, nearing their highest levels since late May.
September Brent crude rose 2%, settling at $91.01 per barrel.
September WTI futures gained 2.3%, closing at $84.34 per barrel.
The August contract expired on Tuesday.
Precious Metals: Bargain-Hunting Drives Gains for Gold and Silver
Gold and silver prices rose on Tuesday, supported by bargain-hunting. Traders continued to closely monitor Middle East tensions to gauge whether rising energy costs might fuel inflation and pressure the Federal Reserve to tighten policy.
Gold prices advanced as much as 2%, rising above $4,080 per ounce. Silver surged up to 5%, marking its largest gain in over five weeks and climbing to just below $60 per ounce. Both metals had declined for two consecutive weeks prior to these moves.
Traders are weighing the impact of rising energy prices against a backdrop of weak U.S. economic data for clues on the Fed's interest rate path.
Despite ongoing Middle East tensions, gold has shown some support around the key psychological level of $4,000 per ounce, indicating the resilience seen last week remains. Silver has been fluctuating around $60 per ounce since late June.
Ewa Manthey, a commodities strategist at ING Bank N/V, stated, "Today's move looks more like bargain-hunting than a reaction to fresh news. The geopolitical environment remains supportive for precious metals, but silver is performing stronger as it benefits from both safe-haven demand and improved sentiment in the industrial metals market driven by higher copper prices."
Rhona O'Connell, Head of Market Analysis at StoneX Financial Ltd., noted, "After 18 days of sideways movement, it's almost certain there has been some fresh buying interest." However, she added that gold "has formed a very strong technical bearish pattern," and an upward breakout would be surprising.
As of 2:45 PM New York time, spot gold was up 1.9% at $4,082.55 per ounce. Silver gained 4.4% to $58.93 per ounce. Platinum and palladium also traded higher.
Base Metals: Copper Hits Highest Level in Over a Month
Copper prices reached their highest level since early June on Tuesday, driven by signs of continued tightening in supply.
Despite persistent geopolitical and macroeconomic uncertainties, copper prices have edged higher this month. The primary drivers are improved market sentiment, declining inventories, rising spot premiums, and relatively stable demand.
At the close of London trading:
LME copper rose 1.9% to $13,885 per tonne.
LME aluminum gained 0.6% to $3,158 per tonne.
LME zinc advanced 0.9% to $3,552 per tonne.
LME nickel increased 0.9% to $17,085 per tonne.
LME tin climbed 1.9% to $53,885 per tonne.
LME lead declined 0.5% to $1,869 per tonne.
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