The Commodities Feed: Oil advances as US tightens pressure on Iran

Oil prices advanced for a fifth day as the United States imposed stricter economic sanctions on Iran. The ICE Brent crude benchmark rose above $92 per barrel while NYMEX WTI reached above $86 per barrel, driven by concerns over tighter sanctions enforcement. President Donald Trump announced additional measures to pressure Iran's economy, warning of tougher penalties for entities supporting Iranian economic activities.

The U.S. Energy Information Administration's latest weekly inventory report revealed a 4.4 million barrel increase in crude oil stocks to 428.8 million barrels, marking the highest level since May and the third consecutive weekly build. This stands in stark contrast to the API's reported 328,000 barrel draw and market expectations for a 74,000 barrel decline.

Strategic Petroleum Reserve levels fell by 5.3 million barrels, bringing the total US crude oil inventory down by a modest 0.9 million barrels.

The commercial stock build was fueled by higher domestic supply despite robust export demand and reduced imports. Crude exports increased by 1.01 million barrels per day over the week, while imports fell by 746,000 barrels to 6.59 million barrels. Refinery activity remained strong, with crude throughput up by 216,000 barrels and utilization rates nearing 97.2%, close to seasonal peaks.

Refined product stocks presented a mixed outlook. Gasoline inventories rose by 0.69 million barrels to 209.4 million barrels, while distillate stocks declined by 1.5 million barrels to 105.6 million barrels, mainly due to lower imports and reduced domestic production. Middle distillate markets remained tight, supported by stable international demand and ongoing supply constraints in key exporting regions.

Copper prices softened as the London Metal Exchange's inventory rose more than 35,000 tonnes, narrowing the cash-to-three-month spread to $176 per ton from a peak of $545 per ton. However, tightness persists at the front of the curve, suggesting the recent price compression may not be fully resolved. Tight physical supply, driven by diversion to the US ahead of expected tariffs, is expected to keep copper prices supported.

Meanwhile, China's refined copper production grew 1.3% year-on-year to 1.3 million tonnes in July, fueled by higher prices for sulphuric acid by-products, which boosted smelter margins and encouraged increased output. In other base metals, lead output fell by 7.3% year-on-year, while zinc production decreased by 0.8% year-on-year.

Talks between the US and Canada on reducing tariffs on Canadian aluminium and steel shipments to 25% from 50% are ongoing, with potential exemptions and product-specific rates. The deal, if finalized, would provide relief to US aluminium consumers and make Canadian steel more competitive in the US market.