Crude, Natural Gas, Gold, Silver, Dollar Spurt on Iran Tensions

Chennai: Rising tensions in the Middle East caused an increase in crude oil, natural gas, gold and silver prices on Monday. Analysts warn that if tensions continue to rise, prices could move further north.

On the Multi Commodity Exchange, crude oil prices rose 8.5 percent to Rs 6600 per barrel from Friday’s closing level of Rs 6092. West Texas Intermediate (WTI) prices rose 7.6 percent on Monday, a day after Iran’s supreme leader Ayatollah Khamenei died in a US-Israeli attack. It had risen as high as $75.43 per barrel in the morning but calmed down after OPEC countries announced plans to increase April production by 206,000 barrels per day (about 0.2 percent of global demand). Brent crude oil also rose to $82.37 in the morning, but fell to $78.45 later in the day.

“OPEC’s increased production will not solve the supply situation as ships do not pass through the Strait of Hormuz, which is used to transport about 20 per cent of global oil,” said Ajay Kedia, MD, Kedia Commodities.

If WTI prices move towards $92.40, Indian crude oil prices could touch Rs 7,800 per barrel as oil from other sources like Venezuela increases the cost of shipping.

Natural gas prices increased by 4 percent to Rupees 300 MMBtu as prices in the international market exceeded $3.5. The main reason for this was the movement in crude oil prices. With the decline of the winter season in the USA and Europe, the demand for natural gas also decreased. However, if tensions continue until the stocking period in April, prices may rise faster.

Gold and silver gained value due to geopolitical tensions. Gold on MCX gained nearly Rs 7,000 per 10 grams as it rose to Rs 1,69,000. Silver also rose 5 per cent to Rs 2,97,000 per kg. In the international market, gold was traded at $5380 and silver at $97. “If the tension continues, gold prices may rise to $6,180 and silver to $110. However, any effort to reduce the tension will cause prices to fall from these levels,” he said.

Meanwhile, the dollar index rose to 98.60 on Monday as safe haven demand triggered the purchase of dollars as well as gold and silver. Aluminum was another metal that rose on Monday due to supply concerns. Some agricultural commodities traded lower on fears of lower Middle Eastern consumption.