Oil prices hit a four-month high as President Trump warned Iran of potential military strikes if it did not make a deal on nuclear weapons.
Brent crude was trading at close to $70 a barrel on Thursday, and gold, seen as a safe haven asset, rose above $5,500 an ounce to a new high as the rally in the commodity continued. Silver was trading near a record high close at $118 an ounce, extending investors’ rush into precious metals.
Oil prices have been rising this week on concerns that the United States may carry out a military attack on Iran, a key Middle Eastern producer, and that could disrupt supply from the region.
Ayatollah Ali Khamenei
GETTY IMAGES
Trump warned Iran that a “massive armada”, including guided missile destroyers, had arrived in the region that was “ready, willing and able to rapidly fulfil its mission, with speed and violence, if necessary”.
A threatened US strike was reported to have been called off this month when Iran said it would no longer execute dissidents following its brutal crackdown on protests against the regime, which is thought to have left thousands dead. President Trump suggested on Wednesday that his condition for holding back on military action was that Tehran would not develop nuclear warheads.
Brent crude and West Texas Intermediate, another oil contract, were trading at their highest prices since last September. Iran is the fourth-largest producer among the Organisation of the Petroleum Exporting Countries (Opec), with output of 3.2 million barrels a day.
Trump is reportedly considering options to attack Iranian security forces and leaders to inspire further protests and potentially topple the regime.
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Suvro Sarkar, DBS Bank’s energy sector team lead, said: “The main driver of oil prices remains geopolitical risk premium surrounding Iran and the Middle East, though unplanned outages in Kazakhstan and the US … have had a temporary impact as well.”
Some analysts are forecasting higher prices because of the Iranian concerns.
“The potential for Iran getting hit has escalated the geopolitical premium of oil prices by potentially $3 to $4 (per barrel),” analysts at Citi said in a note on Wednesday.
They added that further geopolitical escalation could push prices to as high as $72 a barrel for Brent over the next three months.
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The price of gold, which traditionally rises in times of geopolitical strife, has surpassed even many of the more bullish expectations, gaining close to 30 per cent this year. US monetary policy and the weakening outlook for the dollar are also contributing to its strength.
Chris Beauchamp, chief market analyst at IG, has said analyst targets keep “being furiously revised higher, as the price keeps climbing” and that it was being “given renewed impetus by Trump’s comments on the dollar”.
The President indicated on Wednesday that he was comfortable with the dollar’s recent decline, helping send the currency to its lowest level since early 2022. This has stoked concerns that his erratic policy shifts could drive overseas investors to pull back from the US.
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In its recent annual commodities outlook, Goldman Sachs said that the gold rally would carry on this year thanks to “structurally high central bank demand and cyclical support from Federal Reserve cuts”, factors that also led prices higher in 2025.
Silver is also riding high, having more than tripled in value in the past year.