US-Iran war: Crude oil prices surpassed $100 a barrel for the first time since 2022. Meanwhile, safe haven assets gold and silver rates today crashed up to 3% on Monday, March 9, amid escalating tensions in the Middle East.
Brent crude oil climbed 15% to around $107 per barrel, extending last week’s sharp 28% rally. On the other hand, spot gold rate today fell 2.12% to $5,049 per ounce, while spot silver prices plunged 3.51% to $81.34 per ounce, during the Asian trading hours on Monday.
Why are crude oil prices rising?
Oil markets faced the risk of further disruption this week as the conflict involving Iran entered its second week. Major producers curtailed output, while shipping through the Strait of Hormuz — a key route for global oil transportation — was effectively brought to a halt.
According to a Bloomberg report, crisis tensions escalated, investors reduced exposure to riskier assets and moved funds into safer options. The US dollar, which has emerged as the preferred safe-haven during the conflict, strengthened against all of its Group-of-10 counterparts.
On Sunday, Iran intensified attacks across the Middle East, while Israel targeted fuel depots in Tehran and warned it could strike the Islamic Republic’s power grid. Donald Trump cautioned that the United States could consider targeting areas that had not previously been hit. The attacks would continue “until they surrender or, more likely, completely collapse,” he said in a social media post.
Meanwhile, Iran announced the son of the late Ali Khamenei as its new supreme leader, as Tehran continued launching strikes on multiple countries on the ninth day of the conflict in the Middle East.
The United Arab Emirates and Kuwait began scaling back oil production as the near-closure of the crucial Strait of Hormuz disrupted energy markets and impacted global supply.
The effective shutdown of the narrow waterway connecting the Persian Gulf to the open sea has slowed exports from the world’s leading oil-producing region.
Why are gold and silver prices falling?
Gold and silver have faced pressure as surging crude oil prices have fueled inflation concerns in the US, increasing the chances that the Federal Reserve may keep interest rates higher for longer or even consider further hikes, according to Bloomberg.
Elevated borrowing costs and a stronger dollar generally weigh on precious metals. Additionally, bullion has acted as a source of liquidity for investors amid a deepening sell-off in global equities.
Trade and geopolitical disruptions along with concerns over threats to the independence of the Federal Reserve, have boosted demand for safe-haven assets. Strong purchases by central banks have also supported the rally, with the People’s Bank of China adding more gold in February, extending its buying streak to 16 consecutive months.
(This is a developing story)
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
