The Commodities Feed: Oil under pressure as Iran and Oman reach Hormuz deal

Oil prices are under pressure as Iran and Oman have reportedly reached an agreement to resume energy flows through the Strait of Hormuz. The market is hopeful that the US and Iran will also reach a deal, which could help lower inflation. Iran has announced progress in negotiations with Oman, but progress in US-Iran discussions remains crucial before energy flows can realistically resume.

US crude oil inventories increased by 2.48 million barrels over the last week, while the Strategic Petroleum Reserve fell by 2.84 million barrels, leading to a marginal decline in total crude oil inventories. US imports of crude oil rose by 515,000 barrels per day (b/d) week-on-week, while exports grew by 218,000 b/d. Refinery activity slightly decreased, with utilization falling by 0.7 percentage points (pp) to 96.5%.

Refined products, particularly gasoline and distillates, saw tightening inventories, with exports rising to a record 1.88 million b/d. Gold has rallied more than 4% on Wednesday, trading closer to $4,300/oz, as optimism grows over a potential US-Iran agreement that could ease inflation. A weaker US dollar and expectations of lower interest rates have supported gold prices.

Copper prices have also increased, trading above $14,000 per tonne on the LME and near record levels on the Comex. Improved sentiment in the Middle East, driven by hopes for progress in US-Iran negotiations, has benefited industrial metals. Meanwhile, cocoa prices in London have been volatile, with a 5% rally followed by a settlement lower.

The market's focus on the upcoming 2026/27 season, coupled with weather concerns in West Africa, including the impact of El Niño, has contributed to the volatility. Production in the Ivory Coast and Ghana, the two largest cocoa producers, is expected to decline due to swollen shoot virus, aging cocoa trees, and potential weather disruptions.