Oil and gold returned to the spotlight of international markets following new military escalation between the United States and Iran. Oil prices recorded strong gains after the new round of clashes between American and Iranian forces, threatening to derail efforts for a ceasefire agreement to end the war, which has already lasted ten weeks. Brent crude strengthened by up to 2.9%, approaching $103 per barrel before trimming some of its gains. American West Texas Intermediate moved near $96.
July delivery Brent was up 1.1% at $101.18 per barrel in Singapore trading, while June delivery WTI gained 0.9% to $95.62 per barrel. Despite Friday’s fresh gains, Brent continues to post a weekly decline of approximately 6%.
Trump: If they don’t sign the deal quickly, we’ll hit them much harder in the future
US President Donald Trump stated via social media that the three warships successfully exited the Strait of Hormuz without damage, while warning Iran that “if they don’t sign the deal quickly, we’ll hit them much harder and more violently in the future.”
Market attention remains focused on the Strait of Hormuz, which has remained essentially closed since the war began in late February. The situation has caused an unprecedented supply shock, as crude oil flows have been drastically restricted and several oil sources in the region have been taken offline. The critical maritime passage faces a double blockade: Tehran is blocking shipping, while the US prevents vessels from approaching or departing Iranian ports.
“The oil market is moving between two risks: diplomacy on one side and new escalation on the other,” said Charu Chanana, head of investment strategy at Saxo Markets in Singapore. As she noted, markets continue to give odds to the peace proposal, but not enough to eliminate the “war premium” from prices.
The latest clashes further increase tensions in the Middle East as the US tries to disengage from a war that increasingly burdens consumers, with gasoline and diesel prices soaring. The Trump administration awaits a response from Tehran regarding the proposal to reopen the trade route, though Iranian leadership has not yet indicated whether it accepts the terms.
Trump stated late Thursday evening that the ceasefire with Iran remains in effect despite mutual attacks. He also emphasized that there’s no need to restrict American crude oil or aviation fuel exports to address global shortages caused by the war. “We have massive amounts of oil,” he said characteristically.
In the Middle East, the United Arab Emirates announced Friday that air defense systems intercepted missiles and drones. The country sits across from Iran in the Strait of Hormuz and has faced repeated attacks during the conflict, including a strike earlier this week on Fujairah port.
Birol: International Energy Agency ready to proceed with further interventions
International Energy Agency head Fatih Birol warned that the world is losing about 14 million barrels of oil daily due to the war, noting that increased production after the conflict ends will be gradual. He also reiterated that the agency is ready to proceed with further interventions, following member agreement in March to release 400 million barrels.
Bridgewater Associates founder Ray Dalio stated that the outcome of the US-Iran conflict could be determined almost exclusively by who controls the Strait of Hormuz.
Precious metals rally
Meanwhile, investors are turning their attention back to precious metals. Gold posted gains as buying interest strengthened from continued purchases by China’s central bank, despite new Middle East clashes threatening to blow up the fragile ceasefire. Gold’s spot price formed near $4,720 per ounce, posting weekly gains of 2.3% after marginal decline in the previous session.
Silver gained 1.8% to $79.84, while platinum and palladium also moved higher. The Bloomberg Dollar Spot Index strengthened 0.1%, though it posts a weekly decline of 0.2%.
The rally came as the People’s Bank of China, one of the world’s largest gold buyers, purchased eight tons in April — the highest monthly level since 2024.
According to Pepperstone Group analyst Ahmad Asiri, continued purchases by the Chinese central bank may encourage Asian investors. As he noted, markets appear to be repositioning ahead of potential gains once Middle East tensions subside.
Despite today’s gains, gold has declined about 11% since the conflict began, as the near-closure of the Strait of Hormuz and subsequent energy shock reinforced fears of persistent inflation and maintaining interest rates at high levels for longer. Higher interest rates and a strong dollar are considered negative factors for gold, which yields no interest and is priced in US currency.
Investors now await US jobs data, seeking clues about Federal Reserve monetary policy direction. US central bank officials have downgraded expectations for immediate return to interest rate cuts, noting that the war creates uncertainties and clouds economic prospects.
