Oil markets inched higher on Thursday, lifting prices to their highest point in almost seven months, while investors increased allocations to traditional safe-haven assets such as gold amid rising friction between the United States and Iran.
Brent crude advanced 1.86% to $71.66 a barrel, and US crude climbed 1.9% to $66.43 a barrel. The gains followed a strong move a day earlier, when oil jumped more than 4%, marking its biggest single-day increase since October.
Gold also drew fresh interest from investors. The metal rose 2% on Wednesday, moving back above $5,000 per troy ounce, and added a further 0.2% on Thursday, although trading remained somewhat uneven, CNN reported.
The market moves come as US and Iranian representatives met in Geneva in recent days to discuss Iran’s nuclear programme. Speaking on Tuesday, US Vice President JD Vance said Iranian negotiators did not acknowledge some of President Donald Trump’s “red lines” in negotiations.
At the same time, the United States has shifted military assets closer to the Middle East. The possibility of escalation involving Iran has unsettled markets, with traders increasingly alert to risks that could affect global oil supplies.
“The renewed geopolitical tension between the US and Iran is now clearly feeding into prices,” Daniela Hathorn, senior market analyst at Capital.com, said in a note cited by CNN.
Gold’s recent performance has been marked by sharp swings, at times resembling the volatility of a meme stock rather than a typical haven asset. Even so, the latest tensions in the Middle East prompted renewed buying interest, helping the metal regain the $5,000 level.
Focus has also returned to the Strait of Hormuz, the narrow passage off Iran’s coast that is vital for global crude flows. According to the US Energy Information Administration, around 20 million barrels of oil pass through the strait each day, roughly one-fifth of global consumption.
“The latest move [in oil prices] signals a market strengthening an already notable geopolitical risk premium as the world’s most important oil artery once again sits within striking distance of a conflict,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.
Iran has recently said it partially closed the Strait of Hormuz for planned naval exercises, according to Iranian media.
While financial markets often absorb geopolitical flare-ups without lasting impact, the reaction tends to change when the global oil trade is directly at risk. Investors have historically been less sensitive to developments in countries such as Venezuela, but tensions involving Iran typically draw closer scrutiny because of its location near the crucial shipping route.
“In energy markets, probabilities matter, especially when the potential disruption involves a major oil producer and a critical global transit route,” Hathorn at Capital.com said.
“Oil markets are starting to price in higher risk as Iran remains a major producer, and more importantly, sits at the heart of the Strait of Hormuz,” she said. “Even limited disruption or credible threats to shipping lanes could cause an immediate supply shock.”
The strait is central to Iran’s export flows, meaning any interruption would affect both Tehran’s shipments and major buyers such as China that depend heavily on Iranian oil.
Fears of supply disruption have also raised concerns about inflationary pressure globally, as higher crude prices typically feed into consumer costs.
“More immediately, strikes on Iran would risk causing oil prices to jump and threaten to boost inflation in much of the world, reducing the pace or number of interest rate cuts by major central banks,” analysts at Capital Economics stated.
US equities ended Thursday’s session in the red amid the uncertainty. The Dow Jones Industrial Average dropped 268 points, or 0.54%, the S&P 500 declined 0.28%, and the Nasdaq Composite fell 0.31%.
“Given that inflation and affordability are front and center for the White House right now, we’d have to think that protecting the flow of oil through the Strait of Hormuz is a priority, meaning that the priority is a diplomatic solution, and if that is not possible, then a military plan that protects the flow of oil as much as possible,” Dennis Follmer, chief investment officer at Montis Financial, said in a note.
A similar pattern was seen in June when tensions between Israel and Iran intensified and the United States conducted strikes on Iranian nuclear sites. Oil prices rose sharply at the time amid fears that Iran might shut the Strait of Hormuz, but those concerns did not materialise and prices later eased as the situation cooled.
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