Brent Oil and Natural Gas Surge as US-Iran Tensions Send Prices Higher

Geopolitical risk dominated commodity markets last week, sending energy prices sharply higher as concerns grew over the conflict between the United States and Iran and the security of shipments through the Strait of Hormuz.

Brent crude gained 7.2% over the week. Natural gas prices rose 3% per million British thermal units, while European benchmark gas tested its highest level since the beginning of 2023. The article said no permanent disruption had occurred, but the increased risk premium still pushed energy prices higher.

Interest-rate expectations also shaped markets. After employment data exceeded forecasts, the probability of a Federal Reserve rate increase rose as high as 65%. Precious metals remained volatile under pressure from those expectations. Gold ended the week down 0.4%, although central-bank demand continued.

The People's Bank of China bought gold for a 21st consecutive month, taking its reserves to 2,366 tons. Palladium gained 1.9%, while silver fell 0.2%. Zinc reached $3,990 per ton, its highest level in four years, as tight physical supplies lifted base-metal prices.

Agricultural commodities moved in different directions. Wheat fell 5.6% as moderate messages from leaders about a possible diplomatic solution to the Russia-Ukraine war raised hopes of normalized Black Sea trade. Chinese purchases and forecasts of drought in the United States lifted soybeans 1.8% and corn 0.5%. Cocoa dropped 7% and coffee 4.7% amid favorable weather in producing regions and rising stocks, while sugar gained 3% because of lower production in Brazil.