Oil prices climbed as U.S. President Trump issued a warning of renewed strikes on Iran and data indicated another significant drawdown in U.S. crude inventories. Escalating Middle East tensions and expectations for Federal Reserve interest rate hikes contributed to widespread declines in base metals and extended the drop in gold.

Oil Market

Oil prices advanced due to U.S. President Donald Trump's pledge for immediate action against Iran, coupled with data showing another substantial decrease in U.S. crude stockpiles.

WTI crude rose 2.1%, settling above $91 per barrel, reversing earlier losses.

Trump stated that the U.S. "will hit Iran again today," a departure from his previous rhetoric that often aimed to pressure oil prices lower.

However, Trump declined to specify potential targets. Iran responded by vowing to firmly resist any threats.

"Oil prices rose again after Trump said Iran must pay for taking too long to negotiate," said Fawad Razaqzada, a global macro market analyst at StoneX.

Data released by the U.S. government on Wednesday revealed that domestic crude inventories fell by 7.2 million barrels last week. Stockpiles at the Cushing hub also declined but remained above operational minimum levels.

"The market is currently trying to find a new equilibrium," stated Shell CEO, Wael Sawan. "It is more driven by short-term news. If you look at the physical reality, we are indeed drawing down these inventories very quickly."

President Trump noted on Wednesday that since he directed a "covert mission" to support maritime trade, over 200 commercial vessels and 100 million barrels of oil have safely transited the Strait of Hormuz.

WTI for July delivery increased by 2.1%, settling at $90.03 per barrel.

Brent crude for August delivery gained 1.8%, settling at $93.10 per barrel.

Base Metals

Prices for metals such as aluminum and zinc fell, pressured by heightened Middle East tensions and the prospect of Federal Reserve rate hikes, which weighed on the demand outlook for commodities.

Market sentiment deteriorated after U.S. President Donald Trump accused Iran of stalling temporary peace deal negotiations and subsequently vowed to strike Iran again.

However, losses in metal prices narrowed following data showing U.S. core consumer price increases for May came in below expectations.

According to Li Xuezhi, head of research at Chaos Ternary Futures, after last week's strong U.S. jobs data, the metals market has been focused on tightening global liquidity, which is a negative factor for risk assets ranging from gold and silver to industrial materials.

At the close, LME copper was down 0.7% at $13,515.5 per metric ton.

LME aluminum fell 2.3% to $3,466 per ton.

LME nickel declined 2.1% to $17,678 per ton.

LME zinc dropped 1.8% to $3,491 per ton.

LME tin decreased by 1% to $51,960 per ton.

LME lead was down 1.1% at $1,962.5 per ton.

Precious Metals

Gold extended its decline as Trump's vow to strike Iran again sparked concerns that energy supply disruptions could lead to higher interest rates.

Spot gold tumbled more than 4%. Economic data released earlier on Wednesday, which showed U.S. headline inflation posting its largest increase in over three years, exacerbated concerns that the Federal Reserve may need to begin raising rates.

"The market continues to worry about inflation and the potential for restrictive policies," said Bart Melek, global head of commodity strategy at TD Securities.

As of 4:14 p.m. ET, spot gold was down 4.4% at $4,072.09 per ounce.

Spot silver declined 2.9% to $63.4369 per ounce.