[MARKET ANALYSIS] Crude benchmarks gain amidst a US and Iran flare-up and after Kuwait reports drone attacks

The geopolitical environment is clouded by uncertainty, with a recent flare-up between the US and Iran once again leading to firmer trade in crude benchmarks. In brief, the US Central Command said that military forces conducted strikes against Iranian radar at command and control sites located in Goruk and Qeshm Island – this was then met with IRGC retaliation. Outside of Iran, Kuwait said air defences were intercepting hostile missile and drone attacks.
As for the journey to negotiations, the US and Iran are both reportedly altering the draft MoU. President Trump reportedly sent “tougher terms” regarding the framework, NYT reported. In response, Tasnim suggested that Iran may propose its own changes.
As for the European day, there have been a few appearances from Iranian officials; Deputy FM for Legal Affairs Gharibabadi noted that Iran’s goal is to accompany ships through the Strait, and “these arrangements are not temporary and Iran will not back down”. Elsewhere, Iran's FM Baghaei said, "no negotiations have taken place on the details of the nuclear issue at this stage". Comments which helped the upward bias in oil benchmarks.
WTI and Brent are stronger this morning by c. 4.1% and 3.1% respectively. Prices gapped up at the open, and gradually moved higher as the session progressed; as it stands, the complex resides towards highs. WTI trades within a USD 88.45-91.26/bbl range, whilst Brent holds at the upper end of a USD 90.05-92.11/bbl range.
Spot gold is lower by around a per cent and currently resides within a USD 4,490-4,546/oz range, and towards the bottom end of Friday’s range. Ultimately, action is dictated by the inflationary implications of heightened geopolitical risk. Elsewhere, base metals are broadly firmer, following on from a positive APAC session overnight. 3M LME copper posts gains of c. 1.4% and currently trades towards the day’s peaks, within a USD 13,635.4-13,814/t range.