Key Highlights

  • Oil surged 5% this week after renewed strikes between US and Iranian forces, driving inflation fears across markets.
  • The escalation followed attacks on vessels in the Strait of Hormuz and US retaliatory strikes on Iranian targets.
  • Both countries are reportedly set to resume peace talks, offering a potential path to de-escalation.

This week's renewed clashes between US and Iranian forces have sent shockwaves through commodity markets far beyond the energy sector, illustrating how quickly geopolitical escalation in one region can ripple across oil, precious metals, industrial metals and broader inflation expectations simultaneously.

The immediate trigger was a series of attacks on vessels transiting the Strait of Hormuz, one of the world's most critical chokepoints for global oil shipments. The US responded with strikes against Iran, which in turn prompted retaliatory action by Tehran against US bases across the region. That exchange sent crude oil prices surging 5% over the course of the week, as markets priced in the risk of further disruption to a waterway through which a substantial share of the world's seaborne oil trade passes.

The inflationary implications of that oil price surge have been the primary channel through which the conflict has affected other commodity markets. Higher energy costs feed directly into headline inflation figures, and with the Federal Reserve's June meeting minutes already showing several policymakers had favoured a rate hike before ultimately holding steady, the additional inflationary pressure from the oil spike has pushed markets to price in a near 60% probability of a September rate increase.

That shift in rate expectations has been the dominant force behind gold's and silver's declines this week, even though both metals are traditionally viewed as safe havens during periods of geopolitical stress. Gold fell to $4,100 an ounce, down about 1.5% for the week, while silver dropped a steeper 4% to below $60 an ounce, as the prospect of tighter monetary policy for longer outweighed the metals' usual crisis-hedge appeal. Platinum, too, traded near its lowest level since November 2025, reflecting broader weakness across the precious metals complex.

Not every market reacted negatively, however. Copper actually rebounded this week, helped by a recovery in AI and semiconductor stocks and by reports that the US and Iran are set to continue peace negotiations aimed at a lasting resolution. That prospect of de-escalation, along with oil's retreat from its highs later in the week, helped ease some of the inflation concerns that had initially rattled markets, offering a reminder that sentiment around this conflict remains highly fluid. Whether the reported peace talks translate into genuine de-escalation, or whether tensions flare again, will likely remain the single biggest swing factor for commodity markets in the weeks ahead.