Energy: Market bets on the return of Gulf flows. Oil prices retreated sharply last week. Brent and WTI shed 10%, despite a brief rebound following an attack on a cargo ship near the Strait of Hormuz. Brent is trading around $73 per barrel and WTI near $70. The market is primarily focused on the gradual resumption of exports in the Gulf. Saudi Aramco has restarted loadings at Ras Tanura, its major oil terminal located on Saudi Arabia's east coast, after a nearly four-month interruption. However, geopolitical tensions have not disappeared. A vessel linked to Evergreen Marine was hit near Oman. Washington blames Iran, while Tehran asserts it cannot guarantee the safety of ships outside designated routes. This episode serves as a reminder that the ceasefire remains fragile. OPEC is also facing internal friction. Following the recent exit of the United Arab Emirates, Iraq is demanding a higher production quota and is threatening to reconsider its participation in the group. Baghdad has a capacity of nearly 4.7m barrels per day. If this pressure intensifies, it could reinforce expectations of a medium-to-long-term supply surplus.
Metals: Metals underwent a sharp pullback. The decline in equity markets, a strengthening dollar, and a more hawkish tone from the Federal Reserve prompted investors to reduce their exposure to risky assets. Copper fell on the LME to $13270 per ton. The red metal is suffering from expectations of higher U.S. interest rates, which strengthen the dollar and weigh on industrial demand prospects. Gold also experienced a volatile week. The yellow metal briefly dipped below $4000 per ounce, penalized by the rising dollar and the prospect of higher-for-longer rates in the United States. Inflation figures, which came in line with expectations, subsequently helped halt the price slide. In the same vein, silver is looking lackluster at $58, down 25% in a month.
Agricultural Products: A double blow for soybeans and corn, which were penalized by falling oil prices and a strengthening greenback. Indeed, cheaper oil reduces the appeal of raw materials used in biofuels, particularly soybeans and corn, while a stronger dollar also makes American exports less competitive. Conversely, weather conditions are providing some support, allowing prices to generally stabilize in Chicago. Above-normal temperatures could persist in the United States, which could further weigh on crop yields. Wheat fell to 591 cents per bushel, while corn and soybeans stabilized at 442 and 1150 cents, respectively.
