By Naveen Thukral SINGAPORE, March 9 (Reuters) - Oil prices surged around 25% on Monday to their highest since mid-2022, with Brent on track for a record one-day gain, while gold fell 2% as an
Oil soars then retreats, gold drops as Iran war jolts global commodity markets
By Karl Plume and Naveen Thukral
Market Reaction to Escalating Iran War
CHICAGO/SINGAPORE, March 9 (Reuters) - Oil prices surged as much as 29% on Monday to their highest since mid-2022 before paring gains to settle about 7% higher, and gold fell more than 1%, as an escalating Iran war squeezed world energy supplies, boosted the dollar and dampened hopes of interest-rate cuts.
Agriculture markets, led by edible oils that are used as biofuel feedstocks, touched multi-month or multi-year peaks before easing as crude oil markets pulled back from their highs. Aluminium hit four-year peaks on supply worries even as other metals faced headwinds from a stronger dollar.
Market Analyst Insights
"The violent reaction stems from the markets seeing no obvious off-ramp in the escalating Middle East conflict, now a high-stakes stand-off where neither side appears willing to blink first," Tony Sycamore, IG market analyst, said in a note.
"The risk of more lasting economic damage continues to build by the day."
Political Developments and Market Volatility
A rollercoaster trading day began with Iran on Monday naming Mojtaba Khamenei as successor to his father Ali Khamenei as Supreme Leader, signalling that hardliners remained firmly in charge in Tehran a week into its conflict with the U.S. and Israel.
But surging oil prices reversed, stock markets rebounded and the dollar pared gains as global leaders addressed crude supply anxieties and as U.S. President Donald Trump predicted the war could soon be over.
Oil Market Movements
OIL SOARS, RETREATS
The expanding U.S.-Israeli war with Iran led some major Middle Eastern oil producers to cut supplies on fears of prolonged disruption to shipping through the Strait of Hormuz choke point. [O/R]
Brent futures LCOc1 settled up $6.27, or 6.8%, to $98.96 a barrel and U.S. West Texas Intermediate crude CLc1 rose $3.87, or 4.3%, to $94.77.
Impact of Diplomatic Efforts
Prices turned negative shortly after the settlement following news of a phone call between Trump and Russian President Vladimir Putin. Reuters reported that sources said the Trump administration was mulling a further easing of sanctions on Russian oil to help tame global energy prices.
Agricultural and Precious Metals Markets
In agricultural markets, Malaysian palm oil rose 9% and Chicago soybean oil climbed to its highest since late 2022 amid the crude oil rally, but later pared their gains. Wheat and soybeans hit their highest since mid-2024 and corn reached a 10-month high before closing mostly down. [GRA/]
Gold fell more than 1% as a stronger dollar weighed on greenback-priced bullion, while higher energy costs fuelled inflation concerns and further dimmed the prospects for near‑term reductions in interest rates. [GOL/]
Currency and Inflation Effects
The dollar flirted with a three-month high hit last week, but pared gains after Trump's comments that the war "is very complete" allayed investor worries about a protracted conflict that could disrupt global energy supplies and weigh on economic growth. [USD/]
Oil-driven inflation fears and delayed rate-cut expectations likely strengthened U.S. yields and the dollar, outweighing safe-haven demand and pushing gold down.
Base Metals Performance
Aluminium jumped to its highest in four years as supply concerns due to the Middle East war intensified.
Benchmark three-month aluminium on the London Metal Exchange hit its highest since March 2022 at $3,544 per ton.
Other base metals were weighed down by a firmer dollar.
(Reporting by Karl Plume in Chicago and Naveen Thukral in Singapore; Editing by Muralikumar Anantharaman)
