The Commodities Feed: Oil shrugs off Bessent’s ‘D-day’ plan for Iran
The desk observes that oil markets remain largely unaffected by the recent US sanctions against Iran, which were described as a new pressure strategy by the Biden administration. As highlighted in the recent Commodities Feed source, despite over 70 new sanctions aimed at limiting Iranian trade, the most significant buyer, China, may not alter its procurement strategies. This complex interplay could keep oil pricing stable, although European gas markets are showing tighter conditions with storage levels below the five-year average, escalating energy insecurity in the region. With no significant calendar events in the next 30 days, trader focus will be on how geopolitical dynamics evolve ahead of winter heating demands.
What the desk is arguing
The desk argues that oil prices will likely remain stable amid US sanctions on Iran, as traders view these measures as marginal. Per the full note source, the market has reacted somewhat coldly to the renewed economic pressure on Iran, reflecting uncertainty surrounding actual impacts, particularly given China's strong position as a key buyer.
Despite these sanctions, ICE Brent futures closed down 2.35% yesterday, indicating a lack of immediate concern among traders regarding supply disruptions. As outlined in the source, the fragility in European gas markets due to declining storage levels ahead of the heating season could increasingly draw attention, particularly if gas prices continue their upward trajectory.
Where it sits in our coverage
The desk's current view is closely aligned with jpmorgan, projecting a target of 1.10 for Brent crude by March 2026. In contrast, bofa holds a more cautionary stance, setting their target at 1.04 for the same tenor. This discrepancy reflects differing expectations on market responses to geopolitical events and energy demand.
How other firms see it
jpmorgan and goldman share a bullish outlook on oil, indicating a consensus on rising prices despite current pressures, while bofa stands apart with a more bearish perspective. This division underscores the uncertainty in energy markets as traders assess the interplay of sanctions and winter demands.
Traders should also watch the EUR/USD trajectory, as any shifts in energy prices could indirectly influence currency movements, particularly given the Eurozone's reliance on energy imports.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01US sanctions on Iran fail to move oil prices significantly, indicating market apathy.
- 02European gas storage levels are critically low ahead of winter, raising price concerns.
- 03Diversion of supply chains, especially with China as a key buyer, complicates sanction impacts.
- 04The outlook for oil markets remains uncertain amid geopolitical tensions and seasonal demand pressures.
Market implications
Traders should monitor Brent futures closely, particularly any movement below the $70 mark, which could signal deeper market concerns. With current gas prices surging, any announcement regarding Russian gas supply or EU storage progress should be factored into energy market positions.
Risks to this view
If China were to significantly alter its purchasing behavior in response to US sanctions or if new geopolitical developments arise that escalate tensions in the Middle East, the current oil price stability could be jeopardized. Additionally, an unexpected warm winter could exacerbate oversupply conditions in the energy markets.
Articles The Commodities Feed: Oil shrugs off Bessent’s ‘D-day’ plan for Iran Published 03:23 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices drifted lower yesterday despite renewed US plans to tighten economic pressure on Iran. Meanwhile, anxiety is building in Europe’s gas market as storage levels look increasingly fragile heading into the heating season Warren Patterson and Ewa Manthey Energy - EU gas prices continue to move higher Oil prices are steady this morning, holding onto yesterday’s losses after ICE Brent closed 2.35% lower. The market seems largely unfazed by Washington’s push for tighter economic pressure on Iran, with traders treating the US effort to nudge partners away from Iranian trade as marginal rather than market‑moving.
The US announced more than 70 Iran-related sanctions and is threatening secondary sanctions on those that do not cut trading ties with Iran. However, China is the largest buyer of Iranian energy. It remains unclear whether the US would risk a fragile trade truce with Beijing over secondary sanctions.
The market is still awaiting further details on a possible timeline for trading partners to wind down ties with Iran. Supply concerns continue to grow in the European natural gas market, particularly with storage levels, as the region moves closer towards the heating season. TTF front-month futures settled more than 3.7% higher yesterday, with prices breaking above EUR68/MWh and to their highest level since March.
EU gas storage is a little under 63% full, below the 5-year average of 80% and also lower than the almost 76% seen at the same stage last year. At the current rate, it will be difficult for the EU to hit even the lower storage target of 75% ahead of the heating season. This raises the prospects of forced buying, increasing upside risk for gas prices.
Metals - Copper supported by fresh LME inventory drawdowns Copper edged higher after fresh withdrawals from LME warehouses renewed concerns over tight exchange inventories. LME cancelled warrants increased by 51.4kt, the largest daily rise since May. Most cancellations were concentrated in US and Asian locations.
The move follows last week's squeeze in the nearby market, which pushed prompt premiums to record levels. Recent deliveries into LME warehouses helped ease some of the tightness. However, the latest withdrawal suggests that any recovery in inventories may prove temporary.
Inventory movements remain a key focus, with exchange stocks still relatively low. Copper remains supported by strong metal flows into the US. Elevated US premiums are encouraging shipments into the country, tightening availability elsewhere.
Meanwhile, record-high prices are raising demand concerns, particularly in China. Physical market conditions remain healthy, but buyers are becoming more cautious as prices continue to climb. Copper has also found support from a weaker US dollar and remains up almost 15% year-to-date.
For now, tight inventories and continued US-bound flows remain the dominant drivers, leaving the market vulnerable to further bouts of tightness and volatility. Agriculture – Corn rises on lower yield expectations CBOT corn prices extended their rally yesterday, as expectations for a smaller US harvest and ongoing Black Sea tensions raise supply concerns. The recent Pro Farmer crop tour pegged the US corn crop at 15.3bn bushels with an average yield of 173.2bu/acre, well below the USDA’s production estimate of 16.01bn bushels and yield estimate of 180.7bu/acre.
EU corn yields are set to weaken further, with the European Commission’s latest MARS crop report estimating output at 6.61t/ha, down from a previous projection of 6.93t/ha, and below the five-year average of 7.1t/ha. Persistent hot and dry weather across Western and Central Europe significantly reduced summer crop yields. Yield estimates for wheat rose from 5.66t/ha to 5.68t/ha, in line with the five-year average.
Meanwhile, the Indian Sugar Mills Association (ISMA) lowered its 2025/26 gross sugar production forecast to 30.9mt from an initial estimate of 34.5mt (including volumes diverted to ethanol production). It cited adverse weather, lower cane yields, and weaker sugar recovery rates. Annual domestic demand is estimated at 28 to 28.5mt.
To bolster domestic availability and curb prices, the government has introduced a duty-free import window, tightened stock-holding limits, continued special crushing operations, and facilitated an early start to the new harvest. TTF Sugar Persian Gulf Natural gas LNG Iran war Hormuz Grains Geopolitics Corn Copper Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Warren Patterson Head of Commodities Strategy Warren Patterson is Head of Commodities strategy based in Singapore. He joined the bank in April 2016 and covers the entire commodities complex. Previously, he worked at a commodities trade house… Ewa Manthey Commodities Strategist Ewa Manthey is a Commodities Strategist based in London.
She joined the bank in September 2022 and covers the entire commodities complex, with a particular focus on the metals markets. She has… In this article Energy - EU gas prices continue to move higher Metals - Copper supported by fresh LME inventory drawdowns Agriculture – Corn rises on lower yield expectations
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