Global markets kicked off the week with sharp, mixed moves: oil rose amid worries about the security of shipments through the Strait of Hormuz, while gold, by contrast, fell on expectations of further tightening of U.S. monetary policy. The focus is on yet another escalation between Washington and Tehran, which has cast doubt on the fragile ceasefire that had been in place for the past few months.
Brent oil futures rose by nearly 1% to $73.27 per barrel, while U.S. light crude WTI gained 1.2%, climbing to $70.04. The reason was renewed strikes on vessels in the Strait of Hormuz, which slowed shipping and reminded traders again of the vulnerability of the key energy corridor. Still, the rally is being restrained by diplomatic manoeuvres: according to sources, Tehran and Washington agreed on a temporary ceasefire in the Persian Gulf and said they would return to the negotiating table.
Against this backdrop, Saudi state oil company Saudi Aramco resumed crude loading at Ras Tanura port, located west of the Strait of Hormuz. Loading had not been interrupted for almost four months — since the start of the open conflict. At the same time, on Sunday a company helicopter crashed in the same area, killing 14 Saudi nationals. The reasons for the crash have not been disclosed so far.
Gold, meanwhile, lost 0.68%, dropping to $4,061.56 per troy ounce. The metal faced dual pressure: on the one hand, rising oil prices are stoking inflation expectations; on the other, market sentiment worsened after new Iranian missile and drone strikes on U.S. bases in Kuwait and Bahrain. In addition, investors are increasingly pricing in a future increase in the Fed’s rate: the FedWatch tool estimates the probability of a third hike in December at 77%.
As a result, this week’s markets are at a crossroads: on the one hand, the real risk of disruptions to oil supplies and a new wave of geopolitical uncertainty; on the other, hope for a diplomatic breakthrough and signals from the U.S. regulator. Trading participants will watch closely how the situation in the Strait of Hormuz develops, along with any hints of changes to Fed credit policy.
Comments on the news
What role does the Islamic Revolutionary Guard Corps (IRGC) play in Iran’s operations in the Persian Gulf and in threats to shipping in the Strait of Hormuz? — The IRGC is Iran’s main military force responsible for controlling the Persian Gulf and the Strait of Hormuz. Its naval units (IRGC Navy) use high-speed patrol boats, anti-ship missiles, and mines to potentially blockade the strait. Iran views this as leverage in the event of a conflict or sanctions. The IRGC also coordinates with the regular navy, but has special powers in asymmetric threats.
How developed are Iran’s missile and drone programs, and what types of weapons could have been used to attack U.S. bases in Kuwait and Bahrain? — Iran has one of the largest and most diverse missile programs in the Middle East, including ballistic missiles of short and medium range (for example, “Shahab-3,” “Emad,” “Khoramshahr”), cruise missiles (“Soumar,” “Hoveyze”), and a wide range of kamikaze drones (Shahed) and reconnaissance UAVs (for example, “Mohajer-6,” “Abin-3”). For attacks on bases in Kuwait and Bahrain, UAVs such as Shahed-136 or Shahed-131 could have been used, along with short-range missiles such as “Fateh-110” or “Zolfaghar.” However, the exact types depend on the specific incidents — Iran typically uses a combination of UAVs and missiles to minimize interception.
Why is Ras Tanura port in Saudi Arabia considered key for the global oil market, and how does its location relate to events in the Strait of Hormuz? — Ras Tanura is Saudi Arabia’s largest oil port, through which around 90% of its oil exports pass (10–13 million barrels per day). It is located on the coast of the Persian Gulf, south of the Strait of Hormuz. The direct link is this: any incidents in the strait (such as Iranian mines or attacks on tankers) directly threaten the transit of ships to Ras Tanura, since all tankers from this port must pass through Hormuz. Thus, the strait’s security is critical for Saudi exports and global oil prices. Iran has repeatedly stated that it could block the strait, which would effectively make Ras Tanura a hostage to Iranian threats.
Full version: Oil rises and gold falls as tension between America and Iran escalates