Crude oil prices stabilised on Wednesday as investors assessed the escalating impact of the Iran conflict on energy markets. Gold edged higher, buoyed by bargain hunting. Aluminium surged to its highest level since 2022 after major Middle Eastern producer Alba declared force majeure on shipments to some customers.

Crude Oil: Volatile Price Movements as Investors Monitor Middle East Energy Risks

Oil prices fluctuated as investors assessed the escalating impact of the Iran conflict on Middle Eastern energy markets.

WTI stabilised after surging approximately 11% over the preceding two trading sessions, closing below US$75 per barrel.

Traders speculated on the next steps for US military operations to gauge potential shocks to energy markets.

White House Press Secretary Levitt stated that current actions against Iran do not involve ground forces.

Iran's semi-official Tasnim News Agency denied a New York Times report claiming Iranian intelligence operatives had approached the CIA via third-country intelligence agencies to propose terms for ending the conflict. The report had briefly sent oil prices lower.

Saudi Arabia confirmed an attempted attack on its largest refinery, Ras Tanura. Saudi Arabia also confirmed it had rerouted some supplies from the Persian Gulf to the Red Sea.

Vandana Hari, founder of Vanda Insights, remarked: ‘Markets will struggle to calm unless they see evidence of shipping gradually returning to normal.’

The US Energy Information Administration's weekly report released on Wednesday showed US crude inventories rose by approximately 3.5 million barrels, the highest level since May. This alleviated some concerns over supply disruptions.

April WTI crude held steady, settling at $74.66 per barrel.

May Brent crude futures settled at $81.40 per barrel.

Precious Metals: Gold rises on dip-buying

Gold edged higher, recouping some of the previous session's losses as dip-buying emerged amid the fifth day of US-Iran hostilities.

The US indicated it would launch deeper strikes against Iran, stating the nation's military capabilities were ‘evaporating’. Over a dozen countries are now embroiled in the conflict, with Iran targeting both Israel and Gulf states while Israel and the US continue bombing targets within Iran. The US also sank an Iranian warship in international waters. Additionally, Turkey came under attack from Iran.

Tehran dismissed reports suggesting it had contacted the US to negotiate an end to hostilities as ‘pure lies’.

Following gains earlier in the week, the dollar weakened on Wednesday, briefly lifting gold prices by 2.3% before they pared some of those gains.

Peter Kinsella, Global Head of FX Strategy at Union Bancaire Privee, stated that significant reductions in bullish bets by hedge funds and asset managers should limit any downside in gold prices. According to US Commodity Futures Trading Commission data, these investors' net long positions in gold have fallen to near a decade low.

At 3:12 pm New York time, spot gold was up 0.77% at $5,128.25 per ounce; silver rose 1.4% to $83.17; platinum and palladium prices also advanced.

Base metals: Aluminium hits highest since 2022

Aluminium surged to its highest level since 2022 after Aluminium Bahrain BSC suspended deliveries to some customers under force majeure clauses in its supply contracts.

Known as Alba, the company is a major aluminium supplier in the Middle East. Shipments from producers in the region to customers have been disrupted as navigation through the Strait of Hormuz has effectively ground to a halt. Alba confirmed invoking the force majeure clause on Wednesday, following an earlier Bloomberg report of the move.

Alba stated the force majeure relates to passage issues in the Strait of Hormuz, not any disruption or damage to its smelting facilities.

At London market close:

LME copper futures rose 0.8% to $13,057.5 per tonne.

LME aluminium futures gained 2.8% to $3,342.5 per tonne.

LME nickel futures rose 2.2% to $17,491 per tonne.

LME zinc futures gained 1.7% to $3,325.5 per tonne.

LME tin futures climbed 4.5% to $51,019 per tonne.

LME lead futures increased 1.4% to $1,962.5 per tonne.

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