Crude oil prices rose for a second consecutive day on Tuesday amid tensions in Iran, but retreated in after-hours trading following U.S. President Trump's remarks about providing insurance guarantees and naval escorts for oil tankers. Gold prices plunged sharply during the session due to a stronger U.S. dollar and diminished expectations for interest rate cuts. Aluminum prices climbed in London as the conflict in Iran disrupted production in the Middle East.

Crude Oil: Prices Rise for Second Day as Middle East Energy Assets Face Deepening Conflict Impact

Oil prices advanced for a second consecutive day as the broadening conflict deepened its impact on Persian Gulf energy assets amid escalating U.S. and Israeli attacks against Iran.

WTI settled above $74.50 per barrel, marking its largest two-day gain in four years; Brent crude closed above $81 per barrel.

Oil prices retreated in after-hours trading after U.S. President Donald Trump pledged insurance guarantees and naval escorts for tankers and other vessels transiting the Strait of Hormuz.

Trump's remarks abruptly halted a two-day rally fueled by fears of prolonged disruption in the strategic waterway.

Speaking to reporters at the White House earlier Tuesday, Trump said oil prices were “a little high,” but added that “prices will go down” once the conflict ends.

Separately, sources familiar with the matter said Iraq has begun shutting down production at its largest oil field as storage capacity nears exhaustion. The country is reportedly also preparing to cut about 3 million barrels per day of oil output if the Strait of Hormuz crisis persists.

Saudi Aramco is exploring options to redirect more cargo to Yanbu port on the Red Sea coast. However, the Red Sea is not without risks, as Iran-backed Houthi rebels in Yemen have threatened to resume attacks on vessels in the waterway.

The conflict pushed global benchmark Brent crude up 11% in just two days, briefly surpassing $85 per barrel on Tuesday for the first time since July 2024.

Oil gains moderated after documents indicated the International Energy Agency was prepared to assist in stabilizing the market.

Diesel prices surged significantly on Tuesday. The Strait of Hormuz also serves as a vital route for liquefied natural gas (LNG) shipments, with Qatar having suspended production at its world's largest LNG export facility following an Iranian attack.

April WTI crude rose 4.7% to settle at $74.56 per barrel;

May Brent crude futures gained 4.7%, settling at $81.40 per barrel.

Precious Metals: Gold Prices Plunge Sharply

Gold prices fell more than 6% during Tuesday's trading session, weighed down by a stronger U.S. dollar, expectations of reduced monetary easing, and forced selling by investors amid stock market declines triggered by escalating Middle East tensions.

The Bloomberg Dollar Index advanced this week as investors scaled back expectations for Federal Reserve rate cuts, while U.S. Treasury yields rose. Inflation risks fueled by soaring energy prices may prompt the Fed and other global central banks to keep rates steady or even raise them.

Markets currently price in an 80% probability of more than one 25-basis-point Fed rate cut this year, down from fully pricing in two cuts last Friday. Both a stronger dollar and rising bond yields are unfavorable for gold prices.

Michael Haigh, a commodity strategist at Société Générale, noted that Tuesday's U.S. stock market decline forced some investors to liquidate metal positions to meet margin calls in other parts of their portfolios, putting pressure on gold.

At 3:15 p.m. New York time, spot gold fell 3.8% to $5,118.61 per ounce; while spot silver plunged 7.2% to $82.9225 per ounce.

Base Metals: Aluminum Prices Rise

Aluminum prices climbed on Tuesday as escalating tensions over Iran triggered natural gas shortages, prompting a major Middle Eastern producer to halt output and issue force majeure notices to customers.

Qatalum, jointly owned by Qatar's state-run aluminum producer and Norway's Hydro, began a controlled shutdown on Tuesday, stating a full restart could take 6 to 12 months. Hydro has issued force majeure notices to Qatalum's customers, the statement said.

As Middle East tensions deepen, aluminum prices strengthened despite broader weakness in metals markets, with traders focusing on potential output cuts in the region, which accounts for 9% of global production.

At the close of London trading:

LME copper futures fell 1.2% to $12,955 per tonne;

LME aluminum futures rose 1.8% to $3,251 per tonne;

LME nickel futures fell 0.2% to $17,120 per tonne;

LME zinc futures declined 1.4% to $3,269.5 per tonne;

LME tin futures dropped 9% to $48,843 per tonne;

LME lead futures decreased 1%.

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