Commodity markets were dominated on Wednesday by renewed tensions in the Middle East. Following remarks from former President Trump that the US-Iran ceasefire was over and further strikes were possible, oil prices surged while gold and copper prices declined.



Crude Oil: Prices Surge as Trump Declares Truce Over and Threatens More Strikes

Oil prices surged to a two-week high on Wednesday after the US launched another strike against Iran and former US President Donald Trump stated the temporary peace agreement was over, heightening concerns over regional petroleum supplies.

Brent crude futures rose more than 5%, settling at $78.02 per barrel, after briefly surpassing $80 during the session. West Texas Intermediate (WTI) crude also posted its largest gain in five weeks, settling around $73.50 per barrel.

Trump warned that prices could rise further as the US administration considered additional strikes against Iran, including seizing the key oil export hub of Kharg Island. In response, Iran's state-owned Press TV reported that Iran threatened to close the Strait of Hormuz.

Crude prices retreated from their session highs after Trump stated he did not believe a full-scale war would resume.

"The real source of this conflict lies in the ambiguities within the memorandum of understanding and the question of exactly what status Iran will have in the Strait of Hormuz," said Gregory Brew, a geopolitical analyst at Eurasia Group. "The result is an increase in violence, though a full resumption of hostilities is unlikely, and traffic flows through the strait will take longer to return to pre-war levels."

Refined product prices continued their advance on Wednesday; diesel prices spiked as much as 14% after Russia banned diesel exports.

Traders also focused on US crude inventory data released by the Energy Information Administration on Wednesday, which showed the first increase in domestic US crude stocks since April. However, commercial US petroleum inventories remain near their lowest levels in about four years, fueling expectations that the US may no longer be able to sustain its role as the world's supplier of last resort for long if tensions escalate again.

September Brent crude rose 5.2%, settling at $78.02 per barrel.

August WTI crude gained 4.4%, closing at $73.52.



Precious Metals: Gold Prices Decline

Gold prices fell on Wednesday after former President Trump stated the ceasefire with Iran was over, sparking concerns that a resumption of fighting could reignite inflation and push interest rates higher.

Gold fell as much as 2.1% to below $4,030 an ounce before paring losses.

Speaking at a press conference in Ankara, Trump said he believed the ceasefire with Iran was "over" and had been "a waste of time." His comments came after the US launched new strikes against Iran and revoked sanctions waivers that had allowed Iranian oil sales. Oil prices rallied on his remarks.

A rebound in energy prices would reinforce market expectations that the Federal Reserve may need to keep interest rates higher for longer to combat persistent inflation. Swap traders now see a more than 30% chance of a rate hike at the Fed's next meeting, up from less than 20% last Thursday.

"A significant portion of the geopolitical premium is already priced in, so the rekindling of tensions is driving position adjustments rather than new safe-haven buying," said Ewa Manthey, a commodity strategist at ING Bank N.V. "Looking ahead, gold's reaction will depend on how developments impact investor positioning, yield levels, and overall market sentiment."

Spot gold was down 0.5% at $4,087.33 an ounce as of 3:08 p.m. in New York. Silver fell 2.3%. Platinum and palladium also moved lower.



Base Metals: Copper Prices Drop

Copper prices on the London Metal Exchange declined, influenced by Trump's statement that the US-Iran ceasefire had ended.

LME copper fell 1.5% to settle at $13,165.50 a metric ton. Trump's declaration that the ceasefire with Iran was over raised the risk that peace talks had collapsed and full-scale war could resume.

Following Trump's comments, equity markets fell and oil prices rose, with copper trading near the lower end of the narrow range it has occupied since the temporary peace agreement was signed.

Most other metals on the LME traded lower, with aluminum down 0.2% and zinc falling 1.5%, while lead was the exception.