Energy: Chaos reigns in the oil markets, which are fluctuating according to the progress of negotiations between the US and Iran. Volatility remains high: on Monday, barrel prices first plunged by 10% before rebounding 4% on Tuesday. The talks between the US and Iran aim to end the current conflict and fully reopen the Strait of Hormuz. The market initially priced in a positive outcome before correcting course. American and Iranian leaders have indeed tempered trader optimism, indicating that an agreement will take time to reach. Two major hurdles are stalling discussions. First, Iran is demanding the implementation of a maritime toll system, a condition that the United States refuses. Second, the US is calling for the removal of highly enriched uranium from Iranian territory, which Tehran rejects. Tensions rose again following new American military strikes against Iranian facilities. Despite this backdrop, maritime traffic is maintained in part. Iran reported the authorized passage of 33 commercial vessels through the Strait of Hormuz over a 24-hour period. In Europe, geopolitical pressure also persists. Ukraine continues to target Russian refineries, limiting Russia's production capacity. Finally, regarding forecasts, the International Energy Agency is once again sounding the alarm. The IEA fears a risk of an oil deficit this summer due to the peak in seasonal demand and a lack of supply from the Middle East.
Metals: Gold continues its bearish streak at around $4,500. This decline is due to tensions in the energy market. The price of a barrel of Brent crude remains above $100. This situation sustains fears related to global inflation. Consequently, investors anticipate that the US Federal Reserve will keep interest rates high. Markets are currently pricing in a 40% chance of another key rate hike in December. High interest rates penalize gold, as the metal generates no yield. Furthermore, these expectations are supporting the US dollar, which has reached a 6-week high. A strong dollar makes gold more expensive for investors using other currencies. Other precious metals are following this downward trend for the week. Silver fell to $75.80 per ounce. Copper prices are stabilizing at around $13,600 per ton. Investors are adopting a wait-and-see approach and limiting their positions, awaiting the outcome of peace negotiations between the US and Iran.
Agricultural Products: In Chicago, prices for major agricultural commodities declined last week. This fall is primarily due to weather conditions. Forecasts call for beneficial rains in the American Midwest over the coming weeks. This precipitation will favor the development of corn crops, with prices losing ground to 458 cents per bushel. Wheat also fell to 637 cents.
