[MARKET ANALYSIS] Crude gaps higher as geopolitics escalate; gold awaits the FOMC

Crude futures gapped higher overnight as geopolitical tensions escalated after Iran launched missiles at a US base in Jordan, although CENTCOM announced that all missiles were effectively intercepted. It was later reported that the US and Saudi Arabia conducted joint strikes on Iranian-backed militia targets in Iraq. Saudi Arabia's Defence Ministry said air defences intercepted and destroyed several drones, which had attempted to target petroleum facilities in the Eastern Region. Meanwhile, Iran’s IRGC confirmed that they fired ballistic missiles at the US Air Base and US Military Central Command Centre in Jordan, while the IRGC also noted that 3 tankers were hit and seized in the Strait of Hormuz, as well as stated that US interference in the region will not go unanswered. It’s worth noting that the US has not (yet) retaliated to the Iranian strike on the US base in Jordan.  In shipping, A senior Iranian official said Tehran has rejected Oman's proposal for regional joint management of the Strait of Hormuz as unworkable. Meanwhile, UKMTO received a report of suspicious activity, in which the master of a tanker reported hearing an explosion whilst transiting in the southern Red Sea, whilst data showed that ships transiting via the Bab al-Mandeb Strait were at a one-week high on Tuesday. WTI Sept'26 and Brent Oct'26 hit highs of USD 83.30/bbl (vs low USD 79.92/bbl) and USD 85.63/bbl (USD 83.95/bbl) respectively. Prices have waned from best levels, with the US yet to retaliate to the Iranian strikes in Jordan. Dutch TTF found resistance at EUR 59.50/MWh before finding support at EUR 58/MWh and then stabilising around EUR 58.50/MWh at the time of writing. Precious metals are firmer, with some suggesting potential geopolitically induced haven flows against the backdrop of an uneventful Dollar as opposed to a rising Dollar. That being said, spot gold sees its upside capped ahead of the FOMC announcement and presser later (Full preview available on Newsquawk). Spot gold trades in a USD 4,010-4,047/oz range. Spot silver sees gains of a larger magnitude but remains off yesterday’s USD 58.53/oz peak, in a current USD 56.85-58.23/oz range. Base metals are mixed/subdued amid the rise in geopolitical tensions and its impact on growth. 3M LME copper trades in a narrow USD 13,584.00- 13,690.90/t range whilst iron ore prices waned overnight, with some also citing weak steel demand.