Crude Holds Above $112 As Iran Tensions Escalate; Gold Continues To Slip

Crude oil prices extended gains on May 18, with Brent crude trading above $112 per barrel and U.S. benchmark West Texas Intermediate remaining above $108 per barrel amid concerns over supply disruptions in the Middle East.

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Brent crude had already risen nearly 8% last week as geopolitical risks intensified across the region. Oil prices have climbed more than 50% since military action involving the U.S., Israel and Iran escalated at the end of February, tightening energy supplies from key Persian Gulf producers.

Markets remained focused on developments surrounding the Strait of Hormuz, one of the world’s most critical oil shipping routes. Continued disruption to tanker movement through the passage has increased concerns over global crude availability and transportation flows.

Middle East Developments Support Oil Prices

Oil prices moved higher after U.S. President Donald Trump issued fresh remarks directed at Iran through social media, warning that time was running out for Tehran.

Investor sentiment also remained cautious after a drone strike on Sunday caused a fire at a nuclear facility in the United Arab Emirates. It has added more worries regarding regional stability and energy infrastructure protection.

Due to rising crude prices, there is now a threat of resurgence of inflation worldwide, especially among the economies that depend on imported energy sources.

Gold And Silver Extend Declines

Precious metals continued to trade lower as rising crude oil prices pushed global bond yields upward. Higher yields generally reduce the appeal of non-interest-bearing assets such as gold.

Spot gold declined as much as 1.3% to around $4,480 per ounce after falling nearly 4% during the previous week. Silver dropped 2.5% to $74.06 per ounce, extending losses after a decline of more than 5% last week.

Market participants remained cautious as negotiations linked to reopening the Strait of Hormuz showed little progress. The U.S. and Iran continued to remain apart on discussions aimed at easing the conflict and restoring shipping movement through the route.

Base Metals Trade Lower

Base metals also weakened during the session amid concerns over global industrial demand and tighter financial conditions.

The price of copper declined by approximately 1%, while that of aluminium and zinc moved downward as well. The focus on energy cost increases continued to affect investors' outlooks regarding its effect on economic growth expectations.

The prices of metals, together with other commodities, continue to be impacted by developments in the Middle East region and their possible impact on crude oil and ship movements in the region. Higher energy prices and higher interest rates continue to play a role in market sentiments.