The Commodities Feed: Oil drops amid renewed peace deal hopes

Oil prices experienced a significant drop on the day, falling more than 7%, as President Trump called off strikes against Iran in hopes of reviving a Middle East deal. There was cautious optimism that ongoing talks between the US and Iran might be progressing. However, Iranian officials remained skeptical, maintaining that current discussions were limited to shipping routes through the Strait of Hormuz.

The sudden sell-off in oil prices seemed slightly exaggerated, considering the lingering uncertainties. One notable incident involved a cargo vessel off the Omani coast being struck by an unidentified projectile. Despite the apparent overreaction, the underlying uncertainty and the possibility of an escalation remained high. Meanwhile, European gas prices faced pressure, settling 2.65% lower, as storage levels remained below their 2021 levels.

The region's vulnerability to winter demand was highlighted, while EU gas demand was noted as being significantly lower than in 2021. Gold prices rebounded, benefiting from diminished geopolitical concerns and easing energy prices. The Federal Reserve's decision to maintain rates also contributed to a more favorable environment for bullion.

Meanwhile, zinc prices surged to their highest level in nearly four years, driven by tightening concentrate supply and reduced exchange inventories. This increase in zinc prices was expected to continue, despite potential challenges from weaker downstream demand. In the agricultural sector, Vietnam's coffee exports surged, with July exports reaching 396kt, a 287% increase compared to the same period last year.