[MARKET ANALYSIS] Crude extends gains on mounting US-Iran escalation risks; Brent tops USD 104/bbl as the US prepares potential strikes

WTI Nov and Brent Dec futures are firmer, extending their rebound from yesterday's lows as US-Iran tensions continue to escalate (see below for details). WTI has risen to a USD 91.83/bbl high from USD 88.77/bbl (vs yesterday's USD 87.96-90.98/bbl range), while Brent has climbed to USD 104.40/bbl from USD 100.76/bbl (vs yesterday's USD 99.61-102.59/bbl range). Eyes are also on Hurricane Isaias which is making its way across the Gulf Coast. Dutch TTF is underpinned as renewed Middle Eastern escalation risks add to concerns around regional gas supplies and shipping routes. The broader energy complex has also been supported by the prospect of further military action, although the extent of any actual disruption remains uncertain. TTF has climbed from a EUR 79.31/MWh low to a EUR 80.67/MWh high. Precious metals are mixed, with spot gold modestly firmer as geopolitical risks provide some support, although upside remains constrained by global yields and expectations of further Fed tightening, with Fed Waller's recent hawkish-leaning remarks, alongside the upticks in the DXY, not helping. The FOMC Minutes were largely a non-event and showed all participants supported September's 25bps hike, with most expecting another increase by year-end. Spot gold has recovered from a USD 4,103/oz low to a USD 4,143/oz peak before waning again, nonetheless still well within yesterday's USD 4,067-4,170/oz range, while spot silver has underperformed, falling from a USD 60.59/oz peak to a USD 58.71/oz low. Base metals are mixed, with copper initially benefiting from the return of Chinese buyers following the week-long National Day holiday, although the broader risk-off tone and higher energy prices have since weighed on the complex. Reports that the EU is preparing a temporary import cap on Chinese hybrid cars have also added to trade concerns, while Goldman Sachs flagged subdued Chinese gasoline and diesel demand amid high domestic prices. 3M LME copper trades on either side of USD 14.5k/t in a USD 14,445.78-14,652.90/t range. Overnight, reports suggested Trump could order fresh strikes against Iran ahead of the November midterms, with the Pentagon reportedly instructed to prepare for a resumption of major combat operations, although no final decision has been made. Trump also suggested that a deal with Iran is not something he wants to pursue, while reports indicated that mediation efforts between Washington and Tehran have stalled. Further, a tanker was reportedly struck by multiple projectiles near Qatar, resulting in casualties, while a separate report suggested an explosion at an oil tanker assembly site near Fujairah. More recently, i24 News sources suggested Washington has completed operational plans for potential strikes, while explosions and fires in Riyadh, Saudi Arabia, were also reported but not confirmed. On diplomacy, Iran and Oman agreed on safe transit routes through Hormuz, while Tehran has reiterated that its conditions for ending the conflict have been communicated through mediators.