Concerns over Middle East tensions intensify, oil prices surge while gold prices plummet

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Concern about a potential Middle East military conflict intensified after a speech by U.S. President Donald Trump on the 1st, driving international crude oil futures sharply higher on the 2nd. By the close, New York crude oil futures surged more than 11%.

By the close on the 2nd, the light sweet crude oil futures contract for May delivery on the New York Mercantile Exchange rose $11.42 to $111.54 per barrel, an increase of 11.41%; the London Brent crude oil futures contract for June delivery rose $7.87 to $109.03 per barrel, an increase of 7.78%.

On the 1st, Trump said that the Iran conflict could be completed in “a very short period of time,” with all military objectives achieved. “In the next two to three weeks, we will deliver an extremely fierce strike to them… at the same time, negotiations are also underway.”

As investors’ earlier optimistic expectations that the U.S. would quickly end the Iran conflict were dashed, international crude oil futures rose rapidly, and this also sparked market concerns about inflation, strengthening expectations for higher interest rates and dragging down the international gold and silver price performance. On the 2nd, New York Mercantile Exchange June gold futures and May silver futures fell sharply, at one point plunging nearly 4% and nearly 5%, respectively.

A strategist at the Netherlands-based ING Group think tank said on the 2nd that even if shipping through the Strait of Hormuz is resumed, returning to market conditions before the conflict could be a slow process, because upstream production restart, logistics normalization, and rebuilding inventories all require time.

Giles Olds ton, a political risk analyst at Oxford Analytica, said it is unlikely that oil tankers’ passage through the Strait of Hormuz will quickly recover. He noted that the U.S. stance of having other countries take responsibility for transporting oil out of the Strait of Hormuz means the U.S. has, to a large extent, stepped back from the issue; relevant countries themselves need to address it.

Source: Xinhua News Agency

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