Commodities Hold Steady as Markets Digest U.S. Strikes on Iran

Commodities markets opened the week with little movement, even as investors absorbed the fallout from the United States’ weekend bombing of Iranian nuclear facilities. Despite the dramatic escalation in Middle East tensions, traders appear to be taking a wait-and-see approach, with oil prices and other key commodities largely unchanged as of Monday morning.

The U.S. strikes, carried out in coordination with Israel, targeted three of Iran’s main nuclear sites, Fordo, Natanz, and Isfahan. According to the White House, these attacks were intended to degrade Iran’s nuclear capabilities, not to initiate a broader conflict. Iran, for its part, has promised retaliation, raising the specter of further instability in a region that supplies roughly one-fifth of the world’s oil and gas through the Strait of Hormuz.

Given the scale of the military action, the muted reaction from commodities markets has surprised some analysts. Brent crude briefly spiked to a five-month high above $77 per barrel after the strikes but quickly settled back as trading resumed. The U.S. dollar strengthened, reflecting a modest flight to safety, while global equities slipped slightly as investors weighed the risk of Iranian retaliation.

Market observers suggest that the lack of panic reflects a belief that the situation, while serious, is not yet spiraling into a wider war. “Currently, markets seem to view the U.S. military actions against Iran as a contained incident rather than the onset of a larger war,” said one Singapore-based strategist. The absence of significant safe-haven flows into assets like gold or the Japanese yen supports this view.

Still, the potential for disruption remains high. Iran has repeatedly threatened to target U.S. interests in the region and to block the Strait of Hormuz, a vital shipping lane for global energy supplies. Any move to close or disrupt traffic through the Strait could send oil prices sharply higher, with some analysts warning of the possibility of prices reaching $130 per barrel in a worst-case scenario.

For now, though, history suggests that even major shocks to Middle Eastern oil flows tend to be short-lived. Previous crises, including the 2003 Iraq invasion and the 2019 attacks on Saudi oil facilities, caused brief surges in prices but were followed by relatively swift recoveries as supply routes were restored and strategic reserves tapped.

The U.S. attack has injected a fresh layer of uncertainty into global markets. Analysts warn that a sustained increase in oil prices could push inflation higher, particularly in the United States, and potentially derail hopes for interest rate cuts later this year. The Federal Reserve may be forced to keep rates elevated if energy costs feed through to broader price increases.

At the same time, the broader economic impact may be limited if the conflict does not escalate further. Some market participants believe that the strikes, by degrading Iran’s nuclear capabilities, could actually reduce long-term geopolitical risk if they prompt a diplomatic resolution. Others caution that Iran’s response remains the key variable, with the potential for asymmetric attacks on U.S. assets or proxy actions elsewhere in the region.

As of Monday, the market’s verdict is clear, caution, but not panic. Oil and commodity traders are watching closely for any sign of Iranian retaliation or disruption to shipping lanes. The next moves by Tehran will likely determine whether this episode remains a contained flashpoint or marks the start of a broader crisis.

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