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Escalation of the Middle East conflict reached its strongest level in about a month, lifting Brent crude prices while gold remained under pressure.
At the close of trading on May 4, Brent crude climbed 5.8% to $114 a barrel. U.S. WTI rose 4.4% to $106. In the morning session on May 5, WTI was down 1%, trading near $105.
The move followed reports that Iran attacked several ships in the Hormuz Strait, triggering a fire at a UAE oil port. President Donald Trump’s decision to use the U.S. Navy to clear the sea lane was described as the fiercest escalation since a ceasefire was announced about a month earlier.
The UAE accused Iran of launching a fresh strike, including a drone that caused a fire at the Fujairah oil complex. The U.S. military said it destroyed six Iranian boats and intercepted cruise missiles and drones launched by Tehran.
Separately, Iran’s Revolutionary Guard Navy released a map showing an expanded area of control near Hormuz, including the Fujairah and Khawr Fakkan ports and the Umm Al Quwain coastal area of the UAE.
Eurasia Group analysts said crude is likely to stay above $100. They added that U.S. gasoline prices could reach $5 a gallon in June if parties fail to agree to reopen the Hormuz Strait.
In precious metals, global spot gold ended May 4 down more than $90 to $4,521 per ounce. By the morning of May 5, gold was lower again at about $4,518.
Gold faced pressure as Middle East tensions lifted the dollar and inflation risks remained. A stronger dollar can make gold more expensive for buyers outside the United States. At the same time, higher energy prices tied to the conflict are seen as supporting inflation, reinforcing expectations that central banks will be slow to cut rates.
TD Securities commodities strategist Bart Melek said gold’s support is around $4,200, adding that while longer-term factors could still support the metal, near-term uncertainty and the prospect of higher rates may lead some investors to reduce exposure.
U.S. oil exports rose to a record high due to the conflict in May. In April, U.S. crude oil exports averaged 5.2 million barrels per day, up more than 30% compared with the period before the Middle East conflict.
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