Oil prices fell in Asian trading on Wednesday, although Brent crude remained above $100 a barrel, as Middle East strikes continued despite talks of de-escalation.

As of 21:18 ET (01:18 GMT), Brent Oil Futures expiring in May fell 3.8% to $100.51 per barrel, while West Texas Intermediate (WTI) crude futures declined 3.1% to $89.50 per barrel.

Brent oil had slipped to as low as $97.15/barrel earlier in the day.

The decline followed reports that the United States had sent Iran a 15-point plan aimed at ending the war in the region, raising hopes for a ceasefire and reduced risks to key oil shipping routes, including the Strait of Hormuz.

U.S. President Donald Trump said Washington was “in negotiations right now” with Iran, adding that Tehran was “talking sense” and appeared eager to strike a peace deal.

However, media reports said Israel struck Iran’s capital, Tehran, on Wednesday, even as the U.S. signalled potential diplomatic progress.

Trump had earlier described talks with Iran as “productive” on Monday, but Iranian officials denied that any negotiations had taken place.

Oil markets had rallied sharply in recent sessions on fears that escalating tensions could disrupt supplies from the Middle East, a key producing region. Concerns had centred on the Strait of Hormuz, a critical chokepoint for global crude flows.

Wednesday’s sharp selloff reflected a rapid unwinding of the geopolitical risk premium, as traders reacted to signs that tensions could ease.

Analysts said that while the prospect of de-escalation pressured prices, conflicting signals from Washington and Tehran were likely to keep markets volatile.

Markets remain tightly anchored to oil as investors navigate the fallout from the Iran conflict, with Goldman Sachs strategist Christian Mueller-Glissmann saying crude is the key driver across asset classes.

Speaking on Bloomberg TV, he said oil is “the lead asset” and that “all markets are correlated to oil,” as investors look for prices to stabilize after a period of sharp moves. He described the current phase of the conflict as one of “high velocity,” with elevated risk and markets still primarily treating the shock as inflation-driven rather than growth-destructive.

Daan Struyven, who leads Goldman research on oil markets, raised his oil price forecasts for the second time in under two weeks, citing prolonged disruptions in the Strait of Hormuz and rising structural supply risks. The investment bank now assumes flows through the key shipping route will remain at just 5% of normal levels for six weeks, followed by a gradual one-month recovery, a scenario expected to materially tighten global supply.

In the near term, he expects prices to keep trending higher amid uncertainty, noting a “growing risk premium” will be needed to curb demand and guard against shortages.

Goldman now sees XBR/USD averaging $110 in March-April, up from $98 previously and significantly above 2025 levels. The bank also lifted its 2026 forecasts, with Brent seen at $85 and WTI/USD at $79, alongside higher long-dated price assumptions driven by deeper inventory drawdowns and a reassessment of effective spare capacity.

Difficult spot for central bankers

“You haven't seen as much damage on the growth side,” Mueller-Glissmann said, though he expects that balance to shift, with inflation expected to run “a bit higher” and growth “a bit lower” through the rest of the year.

Central banks face a difficult backdrop, he added, noting policymakers are reacting more aggressively after being late to respond in 2022. “It’s a very tough spot,” he said, as officials attempt to contain inflation risks stemming from higher energy prices.

On currencies and safe havens, Mueller-Glissmann said the dollar’s role is less clear this time, despite recent strength.

“We are still leaning more towards fading the dollar strength eventually,” he said, favoring the Swiss franc and yen instead.

Why gold is falling?

Gold has come under pressure largely because, according to Mueller-Glissmann, its role as a hedge against the dollar has weakened in the current environment. When the dollar strengthens, investors are typically less compelled to hold gold as a diversifier, reducing demand at the margin. That dynamic has been a key driver of the recent pullback, alongside tighter financial conditions and a more aggressive policy backdrop, the strategist explained.

Positioning has also played a meaningful role, he said. Gold entered the year with elevated exposure, initially driven by central bank buying and later reinforced by investor inflows. As market volatility picked up, part of that positioning has started to unwind, in some cases retail investors selling gold to raise liquidity. The fact that gold had previously performed well as a safe haven made it a natural source of funds during risk-off moves.

Finally, the speed of the recent decline suggests that derivatives have amplified the move, with options likely contributing to sharper, more mechanical selling, according to Mueller-Glissmann.

Despite this, the pullback in gold prices is not necessarily a shift in the longer-term thesis, he said.

"It does tell me, it's probably an opportunity for longer term investors," the strategist concluded.

Most Asian currencies weakened on Monday, while the dollar steadied as markets feared an escalation in the U.S.-Israel war on Iran, especially after President Donald Trump issued an ultimatum to Tehran. 

Regional markets also remained on edge as oil prices rose, fueling concerns over energy-driven inflation and hawkish central banks in the developed world. 

The dollar index and dollar index futures both steadied in Asian trade after losing some ground last week. 

Indian rupee hits record low on oil shock jitters 

The Indian rupee was among the worst performers on Monday, with the USD/INR pair rising 0.3% and crossing 94 rupees for the first time ever.

India is seen as among the more vulnerable countries to disruptions in oil and gas supplies, with rising oil prices expected to weigh heavily on the rupee. 

Local media reports also pointed to a brewing gas shortage in the country. India imports roughly 80% of its oil and gas consumption, with a bulk of its shipments coming from the Middle East. 

Still, deeper declines in the rupee have been deterred by continued intervention by the Reserve Bank of India in foreign exchange markets. 

South Korean won falls, new BOK governor seen as hawkish 

The South Korea won’s USD/KRW pair rose 0.2%, but traded below a 17-year high hit earlier in the session.

The won took some support from bets that new Bank of Korea Governor Shin Hyun-song was a hawkish pick for the role, and that interest rates could rise later this year.

Shin– who is most famous for predicting the 2008 financial crisis– said he will seek a more “balanced” policy approach.

But analysts viewed past statements from Shin as leaning hawkish, given that he has spoken against overlending, excessive liquidity, and inflation. 

ING analysts said that the BOK under Shin could hike interest rates by as soon as July, especially as the Iran crisis presents more inflationary pressures.

Asia FX weakens with Iran escalation in focus

Broader Asian currencies largely weakened, with the Japanese yen’s USD/JPY pair rising 0.1%, while the Chinese yuan’s USD/CNY pair added nearly 0.4%.

The Singapore dollar’s USD/SGD pair rose 0.1%, while the Australian dollar’s AUD/USD pair slid 0.6%. 

Markets remained on edge over an escalation in the Iran war, especially after Trump said Tehran had 48 hours to reopen the Strait of Hormuz or face U.S. strikes on key energy infrastructure.

Tehran responded by threatening to attack key energy and water infrastructure across the Middle East, and that it would also completely shut the Strait. 

Reports showed the conflict heading towards little de-escalation after it entered its fourth consecutive week, with hostilities continuing across the Middle East.

Gold prices held on to modest gains in European trading on Friday, but were still nursing deep weekly losses, as the U.S.-Israel war on Iran raised inflation expectations and dented bets on interest rate cuts. 

The yellow metal had tumbled on Thursday after several major central banks flagged caution over the inflationary effects of the Iran war. This in turn fueled expectations for no interest rate cuts in the near-term – a scenario that bodes poorly for precious metals. 

Spot gold rose 0.1% to $4,657.00 an ounce by 06:45 ET (10:45 GMT), while gold futures advanced 1.1% to $4,658.41/oz.

Bullion took some relief from a drop in the dollar, which was headed for its first weekly loss in three. The greenback was outpaced by other major developed world currencies after several central banks flagged plans for interest rate hikes in the face of rising energy prices. 

Gold heads for deep weekly losses

Spot gold was trading down roughly 8% this week – its worst weekly drop since early-2020. Despite being widely regarded as a safe haven asset, gold has largely underperformed since the onset of the Iran war in late-February. 

Safe haven flows into gold were vastly overshadowed by a spike in the dollar and U.S. Treasury yields, as markets fretted over the inflationary effects of the conflict.

Oil prices shot up to near four-year highs this week, fueled in large part by strikes on Middle Eastern energy infrastructure. The spike in oil saw a swathe of major global central banks flag caution over potential energy-driven inflation.

The Reserve Bank of Australia hiked interest rates, while the Federal Reserve, European Central Bank, Swiss National Bank and Bank of Japan all left rates steady and warned of few changes in the coming months.

“Growing concerns over the global economic fallout from the conflict are weighing on risk appetite. The spike in oil prices has added to inflation concerns, reducing the likelihood of a near-term U.S. rate cut and creating headwinds for both industrial and precious metals,” analysts at ING said in a note.

Oil prices jumped on Thursday, with benchmark Brent rising to its highest in more than a week to more than $115 a barrel, after Iran attacked energy facilities across the Middle East following Israel’s strike on its South Pars gas field, a major escalation in the war. 

Brent futures were up $6.08, or 5.7%, at $113.46 a barrel by 0814 GMT, after climbing almost $8 to the highest since March 9 to a session high of $115.10.

U.S. West Texas Intermediate crude rose 57 cents, or 0.6%, to $96.89 a barrel, after earlier gaining almost $4 to trade at $100.02.

WTI has been trading at its widest discount to Brent in 11 years due to releases from U.S. strategic reserves and higher freight costs, while renewed attacks on Middle Eastern energy facilities boosted support for Brent. 

"Escalation in the Middle East, precise attacks on oil infrastructure, and the death of Iranian leadership all point to a prolonged disruption in oil supplies," ⁠Phillip Nova analyst Priyanka Sachdeva said in a note. 

"Adding fuel to the fire, the Federal Reserve served ’steady rates’ with a hawkish narrative, pointing to the economic concerns that follow a war."

U.S. FED HOLDS STEADY

The U.S. central bank held interest rates steady on Wednesday, projecting higher inflation as policymakers take stock of the impact of the U.S.-Israel war with Iran.

On Wednesday, QatarEnergy said Iranian missile attacks on Ras Laffan, the site of Qatar’s core LNG processing operations, caused "extensive damage" to its energy hub. 

Saudi Arabia said it intercepted and destroyed four ballistic missiles launched on Wednesday toward Riyadh and an attempted drone attack on a gas facility.

Saudi Aramco’s SAMREF refinery in the Red Sea port of Yanbu was also targeted in an aerial attack on Thursday.

Kuwait Petroleum Corporation said an operational unit at its Mina al-Ahmadi refinery was hit by a drone, igniting a limited fire. 

Iran issued evacuation warnings before its attacks for several oil facilities across Saudi Arabia, the UAE and Qatar, as it prepared to retaliate for strikes on its own energy infrastructure in South Pars and Asaluyeh. 

South Pars is the Iranian sector of the world’s largest natural gas deposit, which Iran shares with U.S. ally Qatar on the other side of the Gulf.

Israel carried out the South Pars gas field attack, but the United States and Qatar were not involved, President Donald Trump said late on Wednesday.

He added that Israel would not further attack Iranian facilities in South Pars unless Iran attacked Qatar, and warned that the United States would respond if Iran acted against Doha.

Earlier, Reuters reported that Trump’s administration is considering deploying thousands of U.S. troops to reinforce its operation in the Middle East, in preparation for the next steps of its campaign against Iran.

Gold prices fell below key levels in Asian trade on Wednesday as markets grew more uncertain over interest rates and inflation before the conclusion of a closely watched Federal Reserve meeting later in the day.

While gold had initially risen back above $5,000 an ounce level, it reversed course as continued hostilities in the U.S.-Israel war on Iran left markets largely on edge over the conflict’s inflationary effects. 

Spot gold fell 0.4% to $4,987.09 by 01:18 ET (05:18 GMT), while gold futures fell 0.4% to $4,990.44/oz. 

Other precious metals also retreated, with spot silver down 0.3% at $79.0345/oz, while spot platinum fell 0.6% to $2,116.40/oz. 

Gold sees limited haven demand as Iran war rages on

A worsening conflict in the Middle East offered limited support to gold, which struggled to remain above $5,000/oz this week even as the U.S. and Israel continued to attack Iran, drawing a wave of retaliatory attacks from the Islamic republic. 

The war showed few signs of abating after an Israeli air strike killed Iran security chief Ali Larijani earlier this week. Oil prices remained perched above $100 a barrel, amid continued concerns over supply disruptions. 

Markets largely feared the inflationary impact of the conflict, especially as oil prices shot up to near four-year highs after supply through a key shipping lane– the Strait of Hormuz– was disrupted. 

Energy-fueled inflation could elicit a more hawkish stance from major central banks, with the Reserve Bank of Australia raising interest rates on Tuesday and warning of inflationary pressures from the conflict. 

Fed, central banks awaited for more rate cues

The Fed, along with a host of other major central banks, are now set to meet in the coming days. The Fed will decide on rates later on Wednesday, followed by the Bank of Japan, the European Central Bank, the Swiss National Bank, and the Bank of England later this week. 

The Fed is widely expected to leave rates unchanged, with focus squarely on whether the central bank expects an inflationary bump from the Iran conflict, and whether it could affect the outlook for interest rates. 

Markets were seen largely pricing out expectations for any interest rate cuts by the Fed until at least September, CME Fedwatch showed.

The prospect of higher for longer rates bodes poorly for gold, given that it increases the opportunity cost of investing in non-yielding assets. 

While gold still retained some of its annual gains, it was nursing a sharp fall from a near $5,600/oz record high hit in late-January. 

Oil prices rose sharply in Asian trade on Tuesday, with Brent remaining above $100 a barrel as concerns over supply disruptions stemming from the U.S.-Israel war on Iran remained largely in play. 

Crude prices recovered after a 5% drop in the prior session, as reports showed some vessels having successfully passed through the Strait of Hormuz. But the shipping lane still remained largely blocked, and U.S. calls for allied help in policing the strait were also mostly rebuffed. 

Brent oil futures rose 2.8% to $103.01/barrel by 00:58 ET (04:58 GMT), while West Texas Intermediate crude futures rose 2.6% to $95.54/barrel. 

Iran conflict rages on, Hormuz crossings limited

Hostilities between the U.S., Israel, and Iran showed few signs of easing on Tuesday as the conflict entered its third consecutive week.

Iran threatened to hit U.S.-affiliated industries in the Middle East, after the U.S. and Israel last week attacked Kharg Island, a key export terminal for the Islamic republic.

Iran and Israel traded air strikes in the early hours of Tuesday, with drones and rockets also being fired at a U.S. embassy in Baghdad. 

U.S. President Donald Trump over the weekend called on at least seven countries, including China, to help reopen trade through the Strait of Hormuz. But his calls were largely rebuffed, with several U.S. allies indicating they had no immediate plans to send ships to the Middle East. 

The closure of the strait has been a major focus point in the war, given that it accounts for about 20% of the world’s oil supply. Iran had effectively blocked the strait earlier this month. 

But reports on Monday showed some India and Pakistan-flagged gas tankers successfully passed through the strait. Iran had earlier signaled that it will allow ships from some countries to pass through the strait, and will attack any vessels tied to the U.S. and its allies. 

Oil prices have risen sharply since the onset of the Iran war, aided by the prospect of prolonged disruptions in markets. Several major Asian economies are highly dependent on oil imports through Hormuz. 

The inflationary effects of the Iran war have been a major pain point for markets, amid concerns that energy-driven inflation will elicit more hawkish measures from global central banks. 

A swathe of major central banks, including the Federal Reserve, European Central Bank, and the Bank of Japan are set to meet this week. 

U.S. Federal Reserve officials, their policy outlook roiled by a war that has stranded a fifth of global oil supply, meet this week to debate whether the Iran conflict is more likely to disrupt economic growth, threaten more persistent inflation, or create a confounding mix of economic slowing and rising prices.

Mindful of how pandemic-era supply shocks put the Fed on a path to miss its 2% inflation target for five years running, policymakers are more likely to strike a cautious if not outright hawkish tone this week. Inflation is mired about a percentage point above target and is poised to move higher, particularly if oil prices that jumped almost 50% in two weeks remain elevated.

"A question that was almost unthinkable two weeks ago is now being more heavily debated: Could the Fed raise rates in 2026?," Matthew Luzzetti, chief U.S. economist for Deutsche Bank Securities, wrote last week. It’s a possibility some Fed policymakers were ready to put on the table even at their last meeting, though Luzzetti concluded rate increases still were unlikely, absent a clear jump in inflation expectations.

Officials will also have to weigh whether the developing economic shock, expected to show up not just in higher prices but also in tighter financial conditions, lower asset prices and more uncertainty, will be the factor that breaks the economy’s resilience.

"Just when it seemed the worst of the policy chaos was over, there is the Iran war to deal with," Dario Perkins, chief economist for global macro at TS Lombard, wrote last week. He recounted the repeated stress the economy has navigated from the pandemic to the inflation and rapid Fed rate hikes that followed and then the tariff, immigration and other policy shifts since President Donald Trump’s return to office. "Our baseline assumption is that the conflict will be short-lived and ’this too shall pass.’ But..could the energy crisis be one shock too many?"

Potential faultlines include February’s loss of 92,000 jobs, middle- and lower-income consumers already stretched by high prices and concerns about credit tightening, particularly if asset prices keep declining.

As of Sunday, the average U.S. retail gasoline price had climbed nearly 25% to the highest since October 2023 in the two weeks since the U.S. and Israel launched attacks on Iran, according to AAA, prompting U.S. officials to predict hostilities would end sooner than later.

"I think that this conflict will certainly come to the end in the next few weeks - could be sooner than that. But the conflict will come to the end in the next few weeks, and we’ll see a rebound in supplies and a pushing down in prices after that," U.S. Energy Secretary Chris Wright told ABC’s "This Week" program on Sunday.    

PROJECTING THROUGH FOG OF WAR 

The Fed is expected to hold interest rates steady at its policy meeting on Tuesday and Wednesday. Data since the last meeting showed little change in the underlying outlook, and the Fed is transitioning to a new leader, Kevin Warsh, nominated by Trump and expected to eventually win Senate confirmation to take over from current Chair Jerome Powell after mid-May. 

The most recent data, however, seems almost ancient two weeks after the start of intense U.S. and Israeli airstrikes and Iranian counterattacks that have all but closed the strategic Strait of Hormuz. At this point Trump has set out no clear set of objectives or timeline for ending the war.

Fed officials, however, will still submit new economic projections, making their best guess about whether what’s about to play out will require a firm stand against inflation with continued tight monetary policy or rate cuts to offset an economic slowdown. 

In the first Fed meeting following Russia’s invasion of Ukraine in 2022, Powell walked through the list of issues to consider.

The impact is "highly uncertain," Powell said at the time. "In addition to the direct effects from higher global oil and commodity prices, the invasion and related events may restrain economic activity abroad and further disrupt supply chains—which would create spillovers to the U.S. economy through trade and other channels. The volatility in financial markets, particularly if sustained, could also act to tighten credit conditions and affect the real economy."

’OUTLOOK HAS TURNED MURKIER’

The situation now is even more dynamic, with the U.S. a combatant and a large share of global oil production and other products unable to move. 

Some issues being raised are imponderably broad if consequential, such as whether the rise in Treasury yields shows a loss of U.S. privilege in global markets, an expectation of higher inflation or something else. Analysts are not so much making forecasts as discussing different scenarios, with the "base case" usually involving a short-lived conflict and eventually falling oil prices, and more damaging outcomes involving an extended standoff between the U.S. and Iran.

Fed officials were surprised last year at how well the economy absorbed higher tariffs, labor market disruptions and an unpredictable environment under Trump. Through all of that U.S. output kept growing even as job creation slowed and inflation remained lodged above target.

Given current uncertainty, the easiest approach now may be to stay close to December’s outlook, which showed a median forecast of just one rate cut this year.

But the spread among individual forecasts may itself tell a tale: Issued after the Fed cut rates by a quarter percentage point at the December meeting, six of 19 officials indicated rates should have stayed higher. The hawkishness turned up another notch in January when minutes of that meeting showed several policymakers were ready to open the door to rate hikes this year, "reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels."

Inflation concerns have only been stoked higher since, while worries about growth and the economy’s cracking point may also intensify - the worst of both worlds for central bankers to try to predict or craft a message.

"The economic outlook has turned murkier as the conflict drags on and oil prices remain high and volatile," Subadra Rajappa, head of research at Societe Generale, wrote last week. "While our base case continues to assume a timely resolution and no sustained economic fallout from this conflict...higher inflation and deteriorating labor market conditions make it difficult for the Fed to balance its dual mandate." 

U.S. President Donald Trump told G7 leaders during a virtual meeting this week that Iran is “about to surrender,” according to a report by Axios citing three officials from G7 countries briefed on the call.

During the discussion on Wednesday morning, Trump reportedly told allies he had “got rid of a cancer that was threatening us all,” while highlighting the results of the U.S. military operation known as “Epic Fury.”

According to Axios, Trump also said the situation inside Iran had become so unstable that it was unclear who could formally declare a surrender.

“Nobody knows who is the leader, so there is no one that can announce surrender,” Trump said during the call, the report added.

The comments come as the war in the Middle East approaches its second week, with both sides continuing to exchange drone and missile strikes across the region.

Trump struck an aggressive tone again on Friday, referring to Iran’s leadership as “deranged scumbags” and saying it was his “great honor” to kill them.

Meanwhile, domestic pressure on the administration increased following the loss of a U.S. military aircraft in the region.

U.S. Central Command said a KC-135 refueling aircraft went down in western Iraq at around 2 p.m. Eastern Time on March 12. Four of the six crew members on board have been confirmed dead, while rescue efforts are ongoing.

“The circumstances of the incident are under investigation,” Central Command said in a statement posted on social media, adding that the loss of the aircraft was not caused by hostile fire or friendly fire.

While Iran may be losing in a conventional military sense — something President Donald Trump continues to emphasize — Tehran’s strategy of disrupting the global economy by threatening the Strait of Hormuz and pushing oil prices higher is proving highly effective. Analysts warn that there is no clear military solution to reopening the Strait of Hormuz.

"This is the dilemma facing stocks – while Trump might be looking for an offramp, he is not fully in control of the conflict," Vital Knowledge analyst Adam Crisafulli said in a morning note on Friday.

"The silver lining on Iran is that both sides are holding back, providing room for compromise (or on a darker note, runway for escalation) – the US/Israel have not targeted Iran’s oil infrastructure in a meaningful way (and Iran is still exporting oil from Hormuz) while Iran’s proxy, the Houthis in Yemen, have stayed on the sidelines."

Gold prices fell in Asian trade on Thursday, sinking back into a trading range seen for more than a week as few signs of de-escalation in the U.S.-Israel war with Iran spurred flows into oil and the dollar. 

While bullion continued to flit between the $5,000-$5,200 an ounce level, it still remained relatively upbeat, as concerns over the war kept some haven demand in play.

Spot gold fell 0.6% to $5,147.05/oz by 01:33 ET (05:33 GMT), while gold futures fell 0.5% to $5,151.86/oz. 

Gold falls as Iran conflict spurs inflation fears, boosts dollar

Weakness in gold came as continued hostilities between the U.S., Israel, and Iran kept market focus squarely on the dollar and oil.

The dollar index rose 0.2% in Asian trade and was close to a two-month high. 

Oil prices jumped sharply on Thursday, briefly rising past $100 a barrel after media reports said two international oil tankers had been struck near Iraq. Other reports showed Oman evacuating a key oil export terminal, while Iran was seen blocking the Strait of Hormuz-- a key supply channel for roughly a fifth of the world’s oil. 

Higher oil prices kept markets largely on edge over a long-term increase in inflation. This in turn fueled concerns over more hawkish central banks in the coming months– a scenario that bodes poorly for gold.

Gold falls as Iran conflict spurs inflation fears, boosts dollar

Weakness in gold came as continued hostilities between the U.S., Israel, and Iran kept market focus squarely on the dollar and oil.

The dollar index rose 0.2% in Asian trade and was close to a two-month high. 

Oil prices jumped sharply on Thursday, briefly rising past $100 a barrel after media reports said two international oil tankers had been struck near Iraq. Other reports showed Oman evacuating a key oil export terminal, while Iran was seen blocking the Strait of Hormuz-- a key supply channel for roughly a fifth of the world’s oil. 

Higher oil prices kept markets largely on edge over a long-term increase in inflation. This in turn fueled concerns over more hawkish central banks in the coming months– a scenario that bodes poorly for gold.