Today Markets Analysis: Energy markets dominated the commodity landscape this week as the escalating US-Iran conflict pushed Brent crude back above the psychologically important $100 per barrel threshold. Brent gained 8.3% on the week, returning to levels last seen in May, while natural gas has surged around 30% over the past month.

With no ceasefire or diplomatic breakthrough between Washington and Tehran heading into the weekend, the outlook for energy prices remains heavily dependent on developments across the Middle East. At the same time, falling US crude inventories, renewed Chinese buying and disruptions to regional energy infrastructure are adding further pressure to an already constrained supply picture.

The key question for markets is increasingly straightforward: how long can oil remain above $100?

Energy: Geopolitical Risk Keeps Oil Elevated

Oil prices fell around 3% on Friday, but Brent crude remained above $104 per barrel, leaving the benchmark significantly higher over both the week and the month.

A sustained return below $100 is likely to require more than a temporary pullback. Markets need evidence that attacks on energy infrastructure are slowing and that tanker traffic through critical shipping routes can resume safely.

The situation around the Red Sea has added another layer of risk. Reports that Houthi forces had taken control of a strategically important Red Sea island raised concerns over shipping security and the movement of Saudi Arabian oil during the conflict.

The Strait of Hormuz remains an even larger concern. Without a formal arrangement allowing tankers to pass safely through the strait, the market is likely to continue pricing a significant geopolitical risk premium into crude.

Iran has also threatened energy infrastructure across the Middle East in response to further US attacks, while Washington has indicated that the conflict could continue for an extended period. That creates the possibility of further supply disruptions in the weeks ahead.

Inventories and Supply Pressures

US crude inventories declined by almost 400,000 barrels last week to 424.1 million barrels. Although the draw was smaller than expected, the direction remains supportive for prices when combined with geopolitical supply risks.

China is also reportedly returning to the oil market to secure additional supplies, potentially providing another source of demand just as regional production and transportation remain under pressure.

Brent is now around 18% higher over the past month, increasing the likelihood that major banks and analysts will revise their energy-price forecasts higher.

Goldman Sachs, for example, has raised its December 2026 Brent and WTI forecasts by $5 to $85 and $80, respectively, while warning that Brent could exceed $120 in 2027 if Gulf production remains substantially below pre-war levels.

The conflict has also pushed US diesel prices to record levels. Damage to regional energy infrastructure, including attacks on Saudi facilities, has contributed to temporary operational disruptions and a significant decline in Saudi oil production.

For consumers and businesses, the impact is extending well beyond crude itself.

Precious Metals: Gold Faces a Critical Fed Test

Gold has been considerably more stable than energy markets, although the precious metal still declined around 2% this week.

XAU/USD recovered approximately 0.5% on Friday following stronger-than-expected US CPI data for August and was trading below $4,430 per ounce.

The major issue for gold now is monetary policy.

Following the inflation data, expectations for a Federal Reserve rate hike at next week’s meeting increased sharply, with markets pricing an approximately 86% probability of an increase.

Higher interest rates generally create a headwind for gold because the metal does not generate income. A more aggressive Fed could therefore place additional pressure on precious metals.

However, the opposite scenario could produce a substantial reversal.

If the Fed leaves rates unchanged despite the market pricing heavily for a hike, gold could see a significant rebound, potentially targeting the 200-day SMA around $4,547 and beyond.

The combination of an energy-price shock, elevated inflation and unchanged interest rates would be particularly important for gold. Such an environment could increase demand for the metal as investors seek protection against inflation and geopolitical uncertainty.

Gold Levels to Watch

Fed Watch: The Key Event for Commodities

The FOMC meeting on September 15–16 is the dominant scheduled macro event for commodity markets next week.

Only months ago, markets were positioning for Fed rate cuts during the second half of the year. The sharp rise in energy prices and renewed inflation concerns have dramatically changed that outlook.

Markets are now pricing an approximately 86% probability of a rate hike.

That positioning has already supported the US dollar and created a more complicated environment for commodities.

For gold, copper and other economically sensitive assets, higher interest rates can weigh on demand. For energy, however, the relationship is more complicated.

Can Higher Rates Eventually Break the Oil Rally?

Central banks have limited ability to directly control inflation caused by an energy supply shock.

If oil prices remain elevated, policymakers can primarily respond by restricting economic demand through higher borrowing costs. Over time, this can produce demand destruction, slowing economic activity and eventually reducing energy consumption.

That creates a potential two-stage process for oil.

Initially, geopolitical supply disruption can overwhelm monetary-policy tightening and keep crude prices elevated. But if central banks remain aggressively hawkish, weaker economic activity could eventually place a ceiling on energy demand.

The market therefore faces an unusual combination of supply-driven inflation and tighter monetary policy.

Industrial Metals: Copper Pulls Back From Record Highs

Copper has also come under pressure as expectations for higher US interest rates increase.

World Bank data continues to point to resilient base-metal demand during the third quarter, alongside copper-specific supply disruptions. However, the prospect of higher borrowing costs has raised concerns over global economic growth.

Copper remains particularly sensitive to the economic cycle, meaning an extended period of monetary tightening could weigh on prices.

Nevertheless, we do not expect a deep or prolonged collapse in copper.

The metal remains fundamental to the global AI infrastructure build-out, alongside electrification, power-grid investment and broader technology infrastructure. These structural demand drivers should provide an important long-term floor beneath the market.

The 50-day SMA around $1,393 is therefore a key short-term support level to monitor.

UK Markets: Energy Inflation Returns to Focus

The renewed oil-price surge is also creating important implications for UK markets.

Shell and BP remain direct beneficiaries of higher crude prices, although both companies also face exposure to supply-chain disruption across the Gulf. For now, the positive impact of higher oil prices appears to be outweighing those concerns.

BP shares rose approximately 5% this week, highlighting how rapidly rising energy prices can feed through to energy-sector valuations.

The bigger concern for the UK economy is inflation.

Unleaded petrol prices have reached their highest level in approximately four years, adding further pressure to household costs. Higher fuel prices could therefore complicate the Bank of England’s policy outlook at precisely the same time that the Federal Reserve is reassessing its own response to renewed inflationary pressure.

Week Ahead: Three Markets, One Central Theme

The coming week will be dominated by the interaction between geopolitical risk, inflation and monetary policy.

Oil remains the clearest expression of the geopolitical shock. Gold provides a hedge against inflation and uncertainty but faces pressure from higher interest rates. Copper sits between the two, balancing structural demand against the threat of slower global growth.

The key events are:

• September 15–16: Federal Reserve FOMC meeting
• September 16: Fed rate decision
• Throughout the week: Developments in the US-Iran conflict
• Throughout the week: Energy infrastructure and tanker-traffic developments
• Throughout the week: Further revisions to oil-price forecasts

Today Markets View

The commodity complex is entering a critical week in which geopolitics and monetary policy could pull prices in opposite directions.

“The immediate direction of oil remains firmly tied to the Middle East. As long as energy infrastructure and critical shipping routes remain under threat, the market is likely to maintain a substantial geopolitical premium. The bigger question is what happens if the conflict persists while central banks respond with higher rates. Initially, supply risk can overwhelm monetary tightening, but sustained rate hikes could eventually weaken demand and place a ceiling on oil prices.”

— Louis Roche, Analyst at Today Markets

For gold, the Fed decision could produce the larger immediate volatility event. A hike would reinforce the pressure created by higher yields and a stronger dollar, while a surprise hold could rapidly revive demand for defensive assets.

Copper remains more fundamentally supported, with AI infrastructure and electrification providing structural demand even as higher rates threaten the broader economic outlook.

For ongoing coverage of oil, precious metals, industrial commodities and global markets, follow Today Markets. Currency and commodity-risk developments are also monitored through Currency Hedger.

Key commodities to watch:
Brent crude: Above $104 — geopolitical risk remains dominant
Gold: Below $4,430 — Fed decision is the key catalyst
Copper: 50-day SMA around $1,393 — important short-term support

Analysis by Louis Roche, Analyst, Today Markets
Currency Hedger Contributor: Currency Hedger Market Intelligence

Source: XTB Chart 2: Gold

Source: XTB Chart 3: Copper

Source: XTB