The Commodities Feed: Oil Under Pressure As Iran And Oman Reach Hormuz Deal

Oil prices remain under pressure, with ICE Brent below $80/bbl, as Iran and Oman reach a deal on shipping routes through the Strait of Hormuz

Energy - US exports record volumes of distillates

ICE Brent continues to trade below $80/bbl as the market pins its hopes on a deal between the US and Iran. It would resume energy flows through the Strait of Hormuz. Iran signalled progress toward this goal, announcing that it has reached an agreement with Oman on new shipping arrangements for the strait, with a joint statement on the deal now being prepared. Iran has insisted that the agreement must proceed without interference from unnamed third parties — a formulation that, in practice, almost certainly refers to the US. The real hinge point now becomes the trajectory of US–Iran discussions, because meaningful progress there is essential before disrupted energy flows can realistically resume.

EIA’s inventory report showed that US commercial crude oil inventories increased by 2.48m barrels over the last week, while the SPR fell by 2.84m barrels. This leaves total crude oil inventories to fall by a marginal 362k barrels. Crude oil imports increased by 515k b/d week-on-week, while exports grew by 218k b/d. Refinery activity edged slightly lower over the week, with refinery utilisation falling by 0.7pp to 96.5%, although it remains at seasonally high levels.

Refined products saw further tightening over the week, with gasoline and distillate inventories falling by 1.64m barrels and 3.47m barrels, respectively. Strong exports are causing further tightening in the US distillates market. Exports rose 98k b/d WoW to a record 1.88m b/d. Globally, middle distillate markets are seeing significant tightness amid supply disruptions in the Middle East and Russia’s export ban on diesel.

Metals - Gold rallies on Hormuz optimism; copper nears record

Gold rallied more than 4% on Wednesday. The strength has continued this morning, with the market moving closer to $4,300/oz amid growing optimism that a US-Iran agreement will ease inflation. A softer US dollar and rising expectations for lower US interest rates provided support for bullion.

The market is increasingly focusing on the disinflationary implications of lower energy prices. Expectations for Federal Reserve tightening have eased, improving the outlook for non-yielding assets such as gold. Continued investment demand from China has also helped underpin the market.

Gold is likely to take its cues from developments in US-Iran negotiations and shifts in Fed expectations. While geopolitical risk premiums may continue to fade, lower oil prices, a weaker dollar and potentially a more dovish-than-expected rates environment should remain supportive for bullion.

In base metals, copper prices also extended gains, with LME copper trading above $14,000/t and Comex futures remaining close to record levels. The market continues to be driven by the diversion of metal into the US ahead of potential tariff decisions. This is leaving availability tighter elsewhere and supporting prices across global exchanges.

Improving sentiment around the Middle East provided a boost to industrial metals. Hopes for progress in negotiations over the reopening of the Strait of Hormuz have weighed on the US dollar. Lower energy prices have reduced inflation concerns and improved the outlook for global growth-sensitive assets. Aluminium and zinc also moved higher alongside copper.

Copper fundamentals remain supportive. Tight physical markets, low inventories outside the US and ongoing supply-side challenges should keep prices well supported. Developments in US tariff policy could also trigger increased volatility in the near term.

Agriculture – Cocoa remains volatile

London cocoa prices had a volatile day yesterday, with the market initially rallying as much 5% only to settle lower. Volatility has increased in recent months as the market focuses more on the upcoming 2026/27 season. Weather has been a concern for the market, particularly in West Africa. These concerns are unlikely to disappear anytime soon due to El Niño weather conditions. Production in the Ivory Coast and Ghana, the top two cocoa producers, is expected to decline in the 2026/27 season (which begins in September) following weak pod development. The Ghana Cocoa Board had previously projected the nation’s 2026/27 cocoa output could fall 450 – 550kt, down from an estimated 750kt in 2025/26. This is due to the impact of swollen shoot virus, ageing cocoa trees, and potential weather disruptions linked to El Niño.