Developments in Middle East geopolitics and their impact on energy supply, inflation, and the global economic outlook continued to dominate commodity market movements. Oil prices rose sharply on Monday as tensions between the U.S. and Iran escalated over the weekend and a fragile ceasefire neared its expiration. Meanwhile, gold and copper prices moved lower.

Crude Oil: Oil Prices Advance as Strains in the Strait of Hormuz Intensify Ahead of U.S.-Iran Ceasefire Deadline Prices for oil and natural gas jumped on Monday, reigniting concerns over risks to energy transit through the Strait of Hormuz and potentially threatening the much-anticipated peace negotiations between the U.S. and Iran. Brent crude futures climbed 5.6%, settling near $95.50 per barrel, while European natural gas initially surged as much as 11% before paring gains. Both the U.S. and Iran accused the other of violating the fragile truce. Maritime traffic through the Strait of Hormuz remained largely stalled, despite optimism for a near-term resolution that had buoyed trading on Friday. West Texas Intermediate crude for May delivery rose 6.9%, settling at $89.61 per barrel. The May contract expires on Tuesday. The more actively traded June contract advanced 5.9%, settling at $87.42 per barrel. June Brent crude gained 5.6%, settling at $95.48 per barrel. The U.S. President stated that he is "highly unlikely to extend" the two-week ceasefire with Iran and indicated that the Strait of Hormuz would remain blocked until a deal is finalized. He said the ceasefire is set to expire Wednesday evening, Washington time. "In my view, the Strait was never truly reopened," said Frank Monkam, Macro Trading Head at Buffalo Bayou Commodities. "There remains considerable disagreement between the two sides in reaching a workable framework." He added that if tensions escalate after the ceasefire expires, the market will have fresh room to establish long positions.

Precious Metals: Gold Prices Decline Gold prices fell on Monday as worsening Middle East tensions over the weekend renewed risks of an energy supply shock exacerbating inflation and cast a shadow over the prospects for U.S.-Iran peace talks. Gold dropped as much as 1.9% before recovering most of its losses, trading around $4,810 per ounce. The U.S. President stated that he is unlikely to extend the ceasefire with Tehran if no agreement is reached before it concludes. He added that the Strait of Hormuz would remain closed until a deal is finalized. Rising oil and natural gas prices revived market concerns about inflation, thereby reducing the likelihood of interest rate cuts by the Federal Reserve. Christopher Wong, a strategist at OCBC Bank, said the sell-off in gold reflected dampened risk sentiment following the sudden shift in geopolitical conditions. "However, there remains a lingering expectation that both sides are building leverage for the next round of talks," he said, adding that trading direction in the interim would depend on broader risk sentiment. Wong noted that the latest price action highlights a trend of buying on dips rather than chasing rallies. He expects gold to trade between $4,700 and $4,900 per ounce in the short term. As of 3:30 PM New York time, spot gold was down 0.3% at $4,816.77 per ounce; spot silver fell 1.3% to $79.84 per ounce.

Base Metals: Uncertainty Over U.S.-Iran Talks Weighs on Copper Prices Copper prices moved lower as turbulent developments over the weekend cast uncertainty over the outlook for U.S.-Iran negotiations, with the fragile ceasefire period increasingly nearing its end. Copper declined 0.5%, closing at $13,275 per metric ton on the London Metal Exchange, with most industrial metals also trading lower. Oil prices rose on Monday, reversing last week's significant decline, as concerns about the global economy again dominated commodity market trading. For metals markets, the primary risk is a prolonged closure of the Strait of Hormuz, which would amplify the energy shock already spreading through the global economy. Central banks could be forced to adopt a more hawkish stance, which would hurt global manufacturing and damage demand for industrial commodities. At the London market close, LME copper was down 0.5% at $13,275 per ton; LME aluminum fell 0.2% to $3,557.5 per ton; LME nickel rose 0.7% to $18,250 per ton; LME zinc dropped 1.1% to $3,408.5 per ton; LME tin was largely flat at $50,684 per ton; LME lead gained 0.6% to $1,974 per ton.