Oil: prices slide on halted strikes – Commerzbank

Commerzbank strategists revealed that Brent Oil prices dropped over 7% to under USD84 at the start of the Asian session after President Trump announced the United States would refrain from launching new strikes against Iran. OPEC+ approved a small increase in production capacity for September, but the Strait of Hormuz remains effectively blocked, leading to ongoing Persian Gulf oil export problems and inflation worries.

President Trump announced on social media that the US would halt attacks on Iran "subject to reaching a DEAL", with Saudi Arabian Crown Prince Mohammed bin Salman urging Trump to avoid further military action. The OPEC+ group raised collective output targets for September to 188k barrels a day, completing the reverse of the 1.65 million barrels per day in voluntary cuts implemented in April 2023.

The Strait of Hormuz remains blocked, continuing to disrupt Persian Gulf oil exports and adding to inflation worries in Asia and Africa. Meanwhile, GBP/USD surged to new three-month heights near 1.3560, following a string of daily declines and mounting selling pressure on the US Dollar. EUR/USD also made a notable rise, reaching the upper 1.1500s for the first time since early June, driven by a strong US Dollar retreat and intervention speculation from the Bank of Japan.

Gold rebounded toward the $4,400 mark per troy ounce as fresh weakness in the US Dollar and talks of a possible Fed rate hike kept traders focused on easing expectations, with July's inflation data meeting expectations at a 0.1% monthly increase in headline CPI and a 0.2% rise excluding food and energy. Overall annual headline inflation remained high at 3.4%, indicating stagnant spending power for wage earners and a core inflation rate that slightly exceeded the 2% target.