Commodities Overview: Trump's Latest Threats Drive Oil Prices Up, Gold Down

Due to Trump ramping up threats against Iran, he has demanded that Iran reach an agreement before Tuesday’s deadline or he will destroy its critical infrastructure. Crude oil prices rose, while gold fell slightly. The London Metal Exchange was closed for the holiday.

Crude Oil: Oil Prices Rise as the Impact of Trump’s Latest Threats Outweighs the Increase in Strait of Hormuz Transit Volumes

Oil prices rose after Trump hinted that any strike action against Iran could be escalated as early as Tuesday, further raising concerns that the impending military action will disrupt early progress made in restoring energy flows through the Strait of Hormuz.

WTI fluctuated in the $6.60 range, with the settlement price up 0.8% to above $112 per barrel. Trump said that if no agreement is reached, he will destroy Iran before midnight on Tuesday. Not long before that, it was reported that U.S. forces were preparing for a potential strike on Iran’s energy targets.

WTI for May delivery rose 0.8%, with the settlement price at $112.41 per barrel;

Brent for June delivery edged up 0.7%, with the settlement price at $109.77 per barrel.

A series of shocks has further heightened concerns in the market that the next stage of conflict could cause irreversible damage to critical infrastructure and further disrupt shipping in the region. Trump later called reopening the Strait of Hormuz “a very important priority,” after which oil prices pulled back somewhat.

Meanwhile, transit volumes through the Strait of Hormuz have risen to the highest level since the early stage of the U.S.-Iran war. Although still below normal levels, the outlook for improved transit has helped trim some of the risk premium that had been priced into oil. However, any progress remains fragile.

“Ships may be sailing, but the question is whether the tankers are also sailing,” said John Kartsonas, founding partner and managing partner of commodity trading firm Breakwave Advisors LLC. “When it comes to oil, there are very few non-Iranian tankers that pass through that strait. In my view, nothing has changed in any substantial way.”

After a weekend meeting, OPEC+ warned that even if the war ends, the impact on energy assets will continue to have a long-term effect on oil supply. Given that Persian Gulf oil exports are still constrained, member countries plan to raise production quotas symbolically.

This week’s trading volumes have been trending downward. Many economies, including the UK, were closed on Monday for the Easter holiday.

Precious Metals: Trump’s Latest Threat Against Iran Drags Gold Lower

Gold prices fell on Monday, dragged down by Trump’s latest threats against Iran.

After Trump said Iran could be destroyed on Tuesday, the gold price fell 0.5%. Earlier, it was reported that U.S. forces were preparing for an action involving potential strikes on Iran’s energy targets.

After Trump made the remarks, the dollar pared back its decline and U.S. Treasury yields edged higher, both of which weighed on gold’s performance.

On Monday, Trump said at a White House press conference, “The whole country could be destroyed in one night, and that night could be tomorrow night.”

Earlier, Iran’s state news agency IRNA reported that Iran rejected a ceasefire proposal and instead demanded a permanent end to the war, the lifting of sanctions, and moving forward with reconstruction efforts. It also called for agreements to be made on the secure transit of the Strait of Hormuz.

At 4:23 p.m. ET, spot gold fell 0.4% to $4,657.09 per ounce; silver was basically flat, while platinum and palladium also declined.

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Responsible editor: Ding Wenwu