Rebounding Crude and Volatile Gold Signal the Return of Conflict Risk

GFN – LONDON:

Oil, gold, industrial metals, and agricultural markets moved sharply on Thursday as renewed Middle East tensions, continued disruption in the Strait of Hormuz, and weaker Ukrainian grain exports reshaped commodity sentiment across energy and raw materials markets.

ICE Brent crude rebounded more than 3% to trade above $97 per barrel after optimism surrounding a temporary US-Iran ceasefire deteriorated, with Tehran stating that several terms of the agreement had been breached and tanker traffic through the Strait of Hormuz remaining halted, according to ING Bank.

“Oil prices rebounded as fighting in the Middle East continued, and the ceasefire outlook deteriorated, keeping uncertainty around the Strait of Hormuz firmly in focus,” ING Bank’s Ewa Manthey and Warren Peterson report.

The bank said a full reopening of the strait appears unlikely in the near term, with refinery shutdowns and production disruptions expected to prolong supply tightness even after shipping resumes. US Energy Information Administration data showed crude inventories rose by 3.1 million barrels last week to 464.7 million barrels, the highest level since June 2023, while gasoline and distillate stocks declined.

In precious metals, gold pared earlier gains after Iranian officials said the temporary ceasefire had been violated, contributing to volatile price action as investors weighed safe-haven demand against shifting risk sentiment and currency movements. ING said the metal remains highly sensitive to geopolitical developments.

“Conflicting geopolitical signals are driving choppy price action in gold, with safe haven demand offset by shifts in risk sentiment and dollar moves,” the bank said.

Industrial metals also weakened, with London Metal Exchange copper reversing earlier gains and trading lower as renewed hostilities undermined confidence in the ceasefire while exchange inventories climbed to their highest level since March 2018. ING said LME copper stocks rose by 6,500 tonnes to 385,275 tonnes, underscoring subdued demand conditions despite prior improvement in sentiment. Speculative positioning data showed investors added to net long positions in aluminium and copper during the week ended 3 April.

In agriculture, Ukraine’s Agriculture Ministry said grain and legume exports for the 2025/26 marketing year fell 31% year over year to 26.8 million tonnes as of 8 April, with corn shipments down 16% and wheat exports down 24%, reflecting continued disruption from Russian attacks on Ukrainian port infrastructure. The moves illustrate how geopolitical conflict remains a cross-commodity driver of volatility spanning energy, metals, and global food supply chains.