Conflicting US-Iran Signals Keep Oil Prices Volatile

Energy – Negotiation Uncertainty

Oil prices remain heavily influenced by developments surrounding Iran, as uncertainty persists over the status of negotiations between the United States and Iran.

Crude prices moved higher yesterday after reports suggested that US-Iran talks had once again stalled. Similar headlines have repeatedly driven market volatility in recent months, while conflicting signals continue to emerge. Although President Trump has indicated that discussions are still ongoing, oil markets remain highly sensitive to rapidly changing news flow.

At the same time, Iran issued warnings directed at ships passing through the Bab el-Mandeb Strait, a critical Red Sea shipping route responsible for a significant share of global energy transportation. This raises concerns for the oil market, particularly because Saudi Arabia has rerouted substantial export volumes from the Persian Gulf to Red Sea terminals. Any disruption in Red Sea traffic could force tankers to seek longer alternative routes via the Suez Canal and around the Cape of Good Hope.

Russia has also introduced a ban on jet fuel exports through the end of November following an increase in Ukrainian drone strikes targeting energy infrastructure. While Russia exports only about 30,000 barrels per day of jet fuel and the broader market impact is expected to be limited, the restriction adds further strain to an already tight refined products market affected by Middle East supply risks.

A more significant threat would emerge if Russia imposes restrictions on diesel exports. Recent reports indicate that authorities are evaluating potential measures to curb diesel shipments abroad.

European natural gas storage levels have finally surpassed 40% capacity, although they remain well below the five-year average of 54%. With peace negotiations showing little progress, concerns are growing that LNG supplies from the Middle East could face prolonged disruptions. If supply issues persist, Asian buyers may increasingly turn to the spot market to replace contracted volumes. Reflecting these concerns, the Dutch government has approved nearly €1 billion in funding for EBN Capital, the state-owned energy company, to support storage refilling. Current backwardation in European gas markets offers limited commercial incentive to build inventories ahead of winter. EBN has been authorized to store up to 80 TWh of natural gas.

Meanwhile, the European Union plans to transfer more than 190 million carbon allowances into its Market Stability Reserve during the 12-month period beginning September 1. The move reflects the carbon market surplus accumulated through 2025 and will result in reduced auction volumes.

Metals – Copper Supported by Tariff Uncertainty

Copper prices in both New York and London advanced yesterday as markets awaited the US administration’s decision regarding potential import tariffs.

The Commerce Department had previously postponed immediate tariff implementation and proposed a phased approach starting at 15% in early 2027. The proposal is currently under review, with updated recommendations expected by the end of June. Expectations surrounding the decision have widened the premium for US copper prices and encouraged increased shipments into American ports. Ongoing uncertainty over tariffs is expected to continue providing support for copper market sentiment.

Agriculture – Uganda Coffee Exports Decline

According to the latest figures from Uganda’s Coffee Development Authority, the country’s coffee exports fell 14% year-on-year to 591,700 bags in April.

The decline was mainly attributed to traders delaying sales amid weaker global coffee prices and improving supply prospects. Despite the monthly slowdown, cumulative exports during the 2025/26 season (October–April) reached 4.3 million bags of 60 kilograms each.

Separately, the Pakistan Sugar Mills Association has urged the government to authorize exports of 760,000 tonnes of surplus sugar after maintaining a one-month strategic reserve. The association estimates national sugar inventories at 7.9 million tonnes, compared with expected domestic consumption of approximately 6.6 million tonnes.