EUROPEAN COMMODITES UPDATE: Crude catapulted higher by Middle East developments, XAU gleams as a haven; now awaiting Iran's full response

WTI/Brent: +7.5%/+7.5%

• A session dominated by geopolitics as Israel conducted strikes on Iranian nuclear & military targets.


• Brent ventured as high as USD 78.50/bbl overnight, though has gradually pulled back, to post firm gains of 7%.


• Most recently, a little upside was seen in the complex on a Tass report, noting Israel is prepared for the possibility of a full-fledged war with Iran, according to PM Netanyahu's office.


• To summarise events, Israel’s operation, dubbed “Rising Lion”, targeted a number of nuclear and military targets. The head of IRCG, Hossein Salami, and nuclear scientist Abbasi, have been killed. Iran’s Natanz enrichment site has been impacted.


• In response, Iran vowed to retaliate, noting also the US would pay a heavy price "now that Israel has crossed all red lines, Iran sees no limits to respond to this crime." - a state of emergency has been declared in Israel.


• US Secretary of State Rubio said the US was not involved in the strikes. JPMorgan yesterday, noted that a US strike on Iran could send Brent to USD 120/bbl. Note, they still maintain their base case of oil in the low-to-mid USD 60s for the rest of 2025. Some desks note that de-escalation could bring crude back to USD 70/bbl.


• US-Iran nuclear talks, initially scheduled for Sunday, have been cancelled due to these attacks, reported the Tehran Times. However, WSJ’s Norman highlights we are still awaiting confirmation from Senior Officials on whether they have been abandoned.


• Further potential catalysts for Crude include Iranian retaliation, Strait of Hormuz activity, indications of US involvement (US Security Council meeting at 16:00 BST), and the length of the Israeli operation.


• On the Strait of Hormuz, around ⅓ of global seaborne oil trade moves through the passage. ING notes that continued disruption in the strait could push Brent to USD 150/bbl.


• Timing-wise, Israel has conveyed that their operation would continue for “as many days" as it takes, one Israeli diplomat said the operation can continue for a “few days” - not months.

Gold: +1.2%

• Spot gold is firmer given the extremely downbeat mood across markets, upside is being capped by a considerably firmer dollar, DXY +0.5% - which is benefitting from haven demand.


• The yellow metal has veered as high as USD 3,444/oz, and looks to its ATH at USD 3500/oz.


• Eyes will be on geopolitical catalysts mentioned in the Crude section.

3M LME Copper: -0.9%

• Copper futures are in the red, given the risk-off environment and the strong Dollar.


• The industrial hit a bottom of USD 9,576.85/t, and has since rebounded by around USD 40/t.

13 Jun 2025 - 09:55- EnergyGeopolitical- Source: Newsquawk