EUROPEAN COMMODITES UPDATE: Crude soars on US strikes, but has since retreated into the red

WTI/Brent: -0.2%/-0.1%

• Crude futures are now in negative territory, with continued oil flows in the Middle-east overshadowing Iran’s parliament voting to close the Strait of Hormuz.


• Brent gapped higher by as much as 5.5% at the open, though gains have since reversed, with the benchmark lower by 0.1%, or USD 0.1/bbl. Specifically, Brent touched USD 81.40, last breached in January, where the month’s high was USD 82.63. Gains have since reversed, with Brent now retreating toward Friday’s low of USD 75.51.


• The initial upside was driven by weekend headlines that the US had conducted strikes on Iranian nuclear targets, alongside news that Iran’s parliament had approved a proposal to close the Strait of Hormuz.


• The reversal reflects a number of factors:


• 1) Flows via the Strait of Hormuz are yet to be impacted and companies including Hapag-Lloyd remain sailing through the Strait, for now. We also look to whether Iran’s security body will make the final decision on whether to proceed with the plan. As a reminder, China is the largest buyer of Iranian oil, the US “urged” China to keep the strait open.


• 2) An element of profit taking and TPs hit ahead of the potential Iranian response, in which “all options” are on the table, according to Foreign Minister Aragchai.3) Market contacts have suggested OPEC+ have not had any calls, with no talks of an emergency meeting yet amid no current signs of supply disruptions.


• Goldman Sachs’ base-case expects no major supply disruptions. GS said that if oil flow through the Strait of Hormuz fell by half for one month, and remained 10% lower for 11 months, Brent crude could briefly reach USD 110/bbl. A drop of 1.75mln BPD in Iranian supply could push Brent to USD 90/bbl.

Gold: -0.2%

• Spot gold is lower, reversing opening gains in tandem with crude. A firmer dollar is also weighing on the haven, with DXY +0.15%.


• The haven has gradually waned since the open, reaching highs of USD 3380/oz, and at the time of writing, testing the USD 3,360/oz mark, now looking to its 21DMA just ten dollars below.

3M LME Copper: -0.2%

• Copper is marginally in the red, initially dented by the threat of oil supply risks (China the largest buyer of Iranian oil), but given the crude reversal, the red metal is faring better. The aforementioned USD, benefitting from haven flows, is also weighing on the industrial metal.


• Levels to look out for include its 21DMA at USD 9,635/t, towards the lower end of a quiet USD 9,608-9,679/t range.

23 Jun 2025 - 10:05- EnergyGeopolitical- Source: Newsquawk