Commodity markets saw sharp divergences on Thursday, with crude oil prices tumbling over 3% on renewed hopes for a diplomatic resolution to the US-Iran conflict, while precious metals rallied as the dollar softened.
Oil Slumps on Peace Prospects
Brent crude fell 3.2% to $94.64 per barrel, and West Texas Intermediate dropped 3.9% to $92.29. The decline followed a ceasefire agreement between Israel and Lebanon late Wednesday, which raised expectations for broader negotiations between Washington and Tehran. Iran has indicated that any deal with the US depends on halting hostilities between Israel and Hezbollah, its ally in Lebanon.
The prospect of reopening the Strait of Hormuz—a critical chokepoint for global oil shipments—weighed heavily on prices. The benchmarks had risen about 2% on Wednesday after Iranian attacks on Kuwait and US military strikes near the strait.
In Washington, the Republican-led House approved a resolution to block President Trump from continuing the war against Iran, though the measure faces an uphill battle in the Senate and a likely presidential veto. Meanwhile, Russian Deputy Prime Minister Alexander Novak acknowledged for the first time that the country's oil production has declined this year due to unplanned refinery maintenance.
US crude stockpiles fell by 8 million barrels last week to 433.7 million, double the decline analysts had expected, according to the Energy Information Administration. Trade sources noted that Iranian crude slipped into discounts for the first time since April, while Russian premiums eased as sellers cut prices to attract Chinese buyers amid sluggish demand.
OPEC Secretary General Haitham Al Ghais said at the St. Petersburg International Economic Forum that the group still expects robust oil demand growth this year and is not revising its estimates despite the Middle East conflict and the closure of the Strait of Hormuz.
Gold Gains as Dollar Weakens
Gold prices rose 0.9% to $4,507.07 per ounce on COMEX, supported by a 0.2% decline in the US dollar and lower Treasury yields. The metal held just above its 200-day moving average, according to independent metals trader Tai Wong. Silver also advanced, gaining 0.7% to $74.195 per ounce.
The drop in oil prices eased concerns about higher inflation and elevated interest rates, which have weighed on non-yielding bullion. Gold hit a record high of $5,594.82 on January 29 but has lost about 16% since the Iran conflict began in late February. Investors now await Friday's US employment report for May, which could provide fresh clues on the labor market and the Federal Reserve's next policy steps.
Base Metals Mixed
Copper prices on the London Metal Exchange rose 0.9% to $13,196 per ton, recovering from a dip below $14,000 earlier in the session. Aluminum fell 0.9% to $3,667.60 per ton.
This article is for informational purposes only and does not constitute financial advice.
