On Tuesday, as the US-Iran conflict entered its 137th day, oil prices increased by nearly 3% to reach a four-week high. This rise followed the re-imposition of a US naval blockade on Iran and intensified military actions by both countries in the Strait of Hormuz, which has increased uncertainty regarding global energy flows.
were last up $1.50, or 1.8%, to $84.80 per barrel at 0330 GMT, while rose $1.70, or 2.2%, to $79.84 a barrel.
Both contracts earlier raised more than $2 a barrel before paring some gains, while Brent had surged 9.6% in the previous session, its biggest daily gain since May 2020.
Oil prices are now at their highest since the two countries signed a memorandum of understanding to end the war on June 17.
The U.S. military carried out a third consecutive night of strikes against Iran on Monday, as U.S. President Donald Trump reinstated a blockade of Iranian shipping and proposed charging a 20% fee to guard the Strait of Hormuz.
The latest escalation, including the U.S. reinstatement of the blockade and Iranian responses, has clearly injected fresh risk into the market, while a full closure hasn’t occurred; the competing objectives of both sides have made the supply picture highly uncertain and could push the world towards a recessionary phase.
Shipping data on Monday also showed the number of tankers transiting the Strait of Hormuz fell in the past day to the lowest level in two months.
Undoubtedly, the key variable to monitor is the physical movement of crude through the Strait of Hormuz. Any meaningful blockage of tanker traffic, prolonged reduction in vessel movements, or disruption to export flows would likely trigger another leg higher in oil prices.
Conversely, if barrels continue to move despite the military escalation, part of the current geopolitical premium could gradually fade. But if the Houthis extend their attacks to Saudi’s crude products in the Red Sea, it could put further uncertainties on crude flows from the region.
Meanwhile, U.S. crude oil stockpiles were expected to have fallen last week, while gasoline and distillate stocks likely rose. Stocks of crude oil in the U.S. Strategic Petroleum Reserve fell by about 3 million barrels last week to 316.5 million barrels, the lowest level since April 1983, according to data from the Department of Energy.
I find that U.S. consumer inflation likely slowed in June, but that would probably offer little comfort to households or rule out an interest rate increase from the Federal Reserve this year, with the conflict in the Middle East still unresolved.
Gold rose on Tuesday after hitting a two-week low earlier in the session, as markets awaited key U.S. inflation data, with escalating U.S.-Iran tensions driving oil prices higher and reinforcing expectations of further Federal Reserve rate hikes.
was up 0.5% at $4,021.62 per ounce by 0440 GMT, recovering from its lowest level since July 1. U.S. for August delivery gained 0.6% at $4,028.
Gold shed about 3% in the previous session, its biggest daily percentage decline in more than a month, as continued fighting between the U.S. and Iran drove oil prices to a one-month high.
While gold is often viewed as a hedge against inflation, higher rates tend to weigh on the non-yielding metal by increasing the appeal of interest-bearing assets.
Undoubtedly, we have a situation where the markets probably don’t want to commit. They have a big batch of event risks in front of them. There’s, of course, the Warsh testimony and then the CPI print, so there’s a lot for people to look at in addition to the headlines out of the Middle East.
Investors will closely watch June U.S. CPI data due later in the day for fresh clues on inflation and the Fed’s policy path, with PPI data and Fed Chair Kevin Warsh’s first semi-annual testimony before Congress this week also in focus.
The U.S. central bank may need to raise interest rates “in the near term” if the coming data show inflation continuing well above the 2% target, Fed Governor Christopher Waller said on Monday.
Traders have ramped up bets on a September U.S. interest rate hike, with CME Group’s FedWatch Tool showing the probability rising to around 76% from 57% a week ago.
Elsewhere, inched 0.1% higher to $57.70 per ounce, having earlier touched a two-week low.
I conclude that neither side appears eager to return to war. Iran has been severely weakened by months of U.S. and Israeli bombardment and stands to receive a substantial economic windfall from the interim agreement due to promised sanctions relief, unfrozen funds, and potential investment. A renewed conflict would put all that at risk.
On the daily chart, after opening the day at $4,008.55, tested the day’s high at $4,040.32, and day’s low at $3,991.90, gold futures are trading at $4,034, struggling to hold the immediate resistance at $4,030, much below the key support at the 9 EMA ($4.089), which has pierced the 200 EMA ($4,322), along with 20 EMA ($4,144) and the 50 EMA ($4,308), forming a “Bearish Crossover”.
Undoubtedly, since June 17, 2026, when both the US and Iran signed a fragile deal, gold futures have slid more than 9.32%, while this slide is expected to push the futures to hit the target at $3,834 on July 20, 2026, which I have defined in my previous analyses.
