Oil prices fell significantly as the United States and Iran agreed to a two-week ceasefire, despite Israeli strikes on Lebanon's Hezbollah clouding the outlook for a temporary Middle East truce. Copper prices climbed to a three-week high. However, gold pared its gains after Iran stated that the provisional ceasefire agreement had already been violated.
Crude Oil: Oil Prices Retreat Sharply as U.S. and Iran Agree to Temporary Two-Week Ceasefire Oil and natural gas prices both declined sharply following the agreement on a two-week ceasefire between the U.S. and Iran. Brent crude fell 13%, closing below $95 per barrel, while WTI crude also dropped. European natural gas futures closed lower, after recording their largest intraday drop in over two years, with prices falling as much as 20% at one point. Traders are assessing the passage situation for the Strait of Hormuz following the U.S.-Iran ceasefire agreement. Iran's semi-official Fars News Agency reported on Wednesday that oil tanker traffic through the Strait of Hormuz had been suspended following Israeli strikes on Lebanon, causing oil prices to recover some of their earlier losses. Despite growing expectations for an end to the conflict, sporadic clashes continue in the region, including Israeli operations in Lebanon and Iranian strikes on Gulf states. The White House announced on Wednesday that the U.S. will engage in negotiations with Iran aiming to end the six-week-long conflict. Neil Roberts, Marine and Aviation Head at Lloyd’s Market Association, stated that while the ceasefire is welcome, "it is highly unlikely that trade to the Gulf will resume just like that." As of 3:27 PM New York time, May WTI crude was down 14.37% at $96.72 per barrel; it settled at $94.41 on Wednesday. June Brent crude was down 11.17% at $97.06 per barrel; it settled at $94.75 on Wednesday.
Base Metals: Copper Prices Reach Three-Week High Copper prices rose to a three-week high after the U.S. and Iran signaled willingness to hold talks during the two-week ceasefire period to end the war, even as Israeli strikes on Lebanon threatened the fragile truce arrangement. As risk appetite reignited in global markets, copper prices surged 3.2% on the London Metal Exchange on Wednesday. Aluminum, the base metal most directly affected by supply concerns during the Middle East conflict, fell 0.6%. At the close: LME copper futures rose 3.2% to $12,709 per metric ton. LME aluminum futures fell 0.6% to $3,455 per metric ton. LME nickel futures rose 2.1% to $17,302 per metric ton. LME zinc futures fell 0.4% to $3,292.5 per metric ton. LME tin futures rose 3.6% to $47,627 per metric ton. LME lead futures fell 0.2% to $1,941.5 per metric ton.
Precious Metals: Gold Trims Gains Gold narrowed its gains after the Speaker of Iran's Parliament stated that the provisional ceasefire agreement reached with the U.S. had been violated. The price of gold had earlier risen as much as 3.2%, climbing above $4,800 per ounce. Iranian Parliament Speaker Mohammad Bagher Ghalibaf stated that three clauses in the current ceasefire proposal had already been violated. This caused U.S. Treasury yields to erase their declines and the U.S. dollar to trim its losses, both putting pressure on gold. In a statement on platform X, Ghalibaf said that "the workable basis upon which the negotiations were founded" had been openly and clearly violated. Ahmad Assiri, a strategist at Pepperstone Group Ltd., said, "In the short term, gold remains highly sensitive to political developments. The current ceasefire provides a buffer window, but it is conditional and fragile. Any signs of a breakdown, particularly developments surrounding the Strait of Hormuz, are likely to reignite volatility," and bring downside risks. As of 2:56 PM ET, spot gold was up 0.002% at $4,706.41 per ounce; silver prices rose 0.99%, while platinum and palladium also moved higher.
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