Energy markets remain extremely sensitive

Bullion Market

Gold prices slipped below $4,980 per ounce, declining about 1% as investors reassessed inflation risks stemming from surging crude oil prices amid the intensifying US–Israel–Iran conflict. The metal extended its recent weakness after posting two consecutive weekly losses. Higher oil prices, which continue to trade above $100 per barrel, have revived concerns that global inflation may remain elevated for longer. As a result, expectations of near-term monetary easing by the Federal Reserve have weakened significantly.

Silver also remained under pressure, falling nearly 4% to around $78 per ounce and marking a fourth consecutive daily decline. The combination of a stronger U.S. dollar, rising bond yields and reduced prospects of policy easing has weighed on non-yielding assets such as precious metals. In the near term, persistent inflation concerns driven by energy prices could cap upside in bullion. However, if geopolitical tensions deepen and stagflation fears intensify, gold’s traditional role as a macro hedge may re-emerge as a key driver later in the year.

Crude Oil Market

Crude oil prices continued to trade near elevated levels, with West Texas Intermediate crude oil hovering above $99 per barrel as markets focused on rising supply risks in West Asia. Tensions escalated following U.S. strikes near Iran’s Kharg Island, a critical hub responsible for nearly 90% of the country’s crude exports. This development has raised concerns over potential disruptions to flows through the Strait of Hormuz, one of the world’s most important energy transit routes.

Risk sentiment intensified further after Iranian drones targeted the Fujairah oil terminal, a strategic export outlet for the UAE’s Murban crude. Although loading operations have resumed, the incident added to market anxiety over energy supply security. Meanwhile, the International Energy Agency announced a coordinated release of more than 400 million barrels from strategic reserves in an effort to stabilize global markets.

Despite these emergency measures, crude prices remain highly sensitive to geopolitical developments around the Strait of Hormuz. While strategic stock releases may temporarily ease supply fears, sustained escalation could keep risk premiums elevated and maintain bullish pressure on oil prices in the near term.

Base Metals

Base metals traded lower across the board as a stronger dollar and rising U.S. Treasury yields continued to pressure the broader metals complex. Lead, aluminium and zinc each declined more than 1%, while copper slipped about 0.5% to trade near $12,720 per ton. The downturn reflects cautious market sentiment as investors reassess global demand prospects amid geopolitical tensions and volatile energy prices.

At the same time, recent data released by the National Bureau of Statistics of China indicated a stronger-than-expected start to the year, with industrial production expanding by 6.3% and fixed-asset investment rising 1.8%. These figures suggest improving economic momentum in China, the world’s largest consumer of industrial metals.

However, in the near term, profit-taking after the recent rally, combined with geopolitical uncertainties and potential demand moderation, may continue to keep base metals under pressure despite underlying supply risks.

Natural Gas

U.S. natural gas futures slipped toward $3.10 per MMBtu after retreating from a one-month high. Prices declined as a warmer spring outlook and record domestic output offset concerns related to geopolitical supply disruptions. Latest data from the U.S. Energy Information Administration showed a storage withdrawal of 38 Bcf, slightly below expectations of 42 Bcf, indicating that seasonal heating demand is beginning to fade as winter draws to a close.

Although the ongoing conflict has disrupted shipments through the Strait of Hormuz and temporarily halted operations at Qatar’s major LNG hub, the impact on U.S. prices has been limited. Ample domestic supply and LNG export facilities already operating near full capacity have kept the market well supplied.

Fundamentally, the natural gas market remains adequately balanced, and unless demand strengthens unexpectedly, near-term price risks are likely to remain tilted to the downside.