[MARKET ANALYSIS] Crude firms as US-Iran tensions persist; metals slide as inflation concerns lift yields

WTI Nov and Brent Dec futures are firmer after gapping higher at the open as US-Iran tensions somewhat picked up over the weekend (see below for details), with no notable de-escalation progress to report thus far following the UNGA. WTI Nov trades within a USD 92.68-94.73/bbl range, while Brent Dec trades within a USD 97.62-99.60/bbl range. Dutch TTF is firmer as renewed Middle East tensions add to European supply concerns, with the EU warning member states of a potential energy price crisis and urging them to continue filling storage while considering measures to curb demand. TTF trades towards the top end of a EUR 72.30-73.83/MWh range. Precious metals are sharply lower this morning as the renewed rise in oil prices adds to inflation concerns, pushing yields higher and reinforcing expectations for further Fed tightening. Spot gold has fallen through USD 4,200/oz and trades near the bottom of a USD 4,157-4,286/oz range. Spot silver underperforms to a greater extent, falling almost 5% at the time of writing to around USD 61.00/oz within a USD 61.05-64.26/oz range. Base metals are also softer amid the higher yield environment and broader selling across metals, while weaker Chinese data adds another headwind ahead of a holiday-shortened weekend for China.. Chinese Industrial Profits growth slowed to 4.2% Y/Y in August from 11.2%, with YTD growth easing to 15.7% from 17.6%. 3M LME copper resides at the bottom of a 14,376.58-14,612.00/t range. Over the weekend, Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz, while Iran said any reopening remains contingent on its conditions being met and its UN delegation reportedly has no plans for talks with the US. Trump nonetheless expects negotiations to resume this week, with the Iranian President this morning also supporting talks. Further, there was renewed Houthi activity against Saudi Arabia, with explosions reported in Riyadh and disruption at King Khalid International Airport. Traders are also mindful on US diesel policy after Trump said he is “thinking very seriously” about an export ban, despite earlier White House assurances that one would not be implemented.