Commodities Overview: Brent Crude Closes Higher; LME Aluminum Posts Largest Decline Since 2022; Gold Falls for Seventh Consecutive Day

Brent crude oil closed higher, as escalating attacks in the Persian Gulf region caused long-term damage to major energy facilities. Industrial metals fell sharply, with aluminum prices experiencing their largest decline since 2022. As Middle East tensions push up oil prices and reduce the likelihood of a rate cut in the U.S. in the short term, gold has declined for the seventh consecutive trading day.

Crude Oil: Brent Fluctuates and Closes Higher Amid Escalating Attacks on Middle Eastern Energy Facilities

Brent crude oil ended higher, with escalating attacks in the Persian Gulf region causing long-term damage to key energy infrastructure.

On Thursday, oil markets experienced increased volatility, with sharp price swings prompting some speculators to exit.

Brent crude briefly rose 11%, breaking above $119.13 per barrel, then retraced most of the gains, closing up 1.2% at $108.65, with prices continuing to fall after hours.

Iran launched missile attacks on Ras Laffan Industrial City in Qatar, severely damaging the world’s largest liquefied natural gas (LNG) plant.

QatarEnergy CEO Saad al-Kaabi told Reuters that two facilities, accounting for 17% of the country’s LNG export capacity, were damaged, with repairs potentially taking three to five years.

Traders said extreme volatility suppressed trading activity, with volume declining.

“Oil was on a rollercoaster again today,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “As signals of de-escalation appeared, prices pulled back.”

During U.S. trading hours, investors weighed statements from President Donald Trump and Treasury Secretary Steven Mnuchin.

When asked whether ground troops would be sent to the Middle East, Trump said he would not send troops anywhere; Mnuchin said the Iranian regime might collapse on its own.

“The latest wave of attacks on Gulf energy infrastructure underscores the region’s extremely challenging supply outlook,” said Florence Schmit, energy strategist at Rabobank.

Base Metals: Aluminum Prices Drop Largest Since 2022

Industrial metals declined sharply, with aluminum prices experiencing their biggest drop since 2022, as Middle East tensions pushed energy prices higher and heightened global economic risks.

LME copper fell 2%, erasing its gains for the year; aluminum prices dropped 4.4%. Escalating attacks in the Persian Gulf threaten the long-term security of critical energy infrastructure, driving up European natural gas and Brent crude oil prices.

Jason Ying, commodities strategist at BNP Paribas in Paris, said, “Today’s price movements seem mainly driven by risk aversion and concerns over macroeconomic growth, leading to widespread selling of base and precious metals.”

At the close, LME copper fell 2% to $12,146.5 per ton;

LME aluminum dropped 4.4% to $3,252 per ton;

LME nickel declined 1% to $16,984 per ton;

LME zinc fell 2% to $3,071.5 per ton;

LME tin dropped 3.4% to $43,540 per ton;

LME lead declined 1.4% to $1,887.5 per ton.

Precious Metals: Gold Prices Fall for Seventh Consecutive Day

As Middle East tensions push up oil prices and reduce the likelihood of a U.S. rate cut in the near term, gold has declined for the seventh straight trading day.

Gold initially fell as much as 6.6% during the session, then narrowed losses, potentially marking the longest losing streak of 2023. The nearly three-week-long Iran conflict, soaring oil and natural gas prices, and increased inflation risks have reduced the chances of rate cuts by the Federal Reserve and other central banks. This poses a headwind for non-yielding gold. Silver plunged over 13% at one point, then pared losses.

Bart Melek, head of global commodity strategy at TD Securities, said, “This is driven by the combined effects of interest rates and oil prices. Concerns about slowing growth amid inflation are prompting the Fed and other central banks to tighten policy.”

With the Iran conflict escalating and energy prices soaring, global equities and bond markets experienced sell-offs earlier Thursday. Melek noted that some investors sold precious metal holdings to raise cash.

As of 5 p.m. New York time, gold spot prices fell 3.5% to $4,650.02 per ounce;

Silver spot prices declined 3.4% to $72.8251 per ounce.