West Texas Intermediate (WTI) Crude Oil advanced toward $94.00, rising 2.52% on the day, driven by renewed geopolitical tensions in the Middle East and concerns over global oil supplies [1]. The US Central Command (CENTCOM) reported that Iran launched ballistic missiles toward Kuwait and Bahrain, which failed to reach their targets. In response, US forces conducted retaliatory strikes on Iran’s Qeshm Island. Iran’s Foreign Ministry condemned the operation and warned of potential responses against any country permitting attacks from its territory or airspace [1]. Negotiations between Washington and Tehran remain uncertain, with US President Donald Trump stating that talks are ongoing and Iran has agreed not to develop nuclear weapons, while Iranian media reported a suspension in communication for several days [1][2].
The oil market is further supported by a sharp drawdown in US crude inventories. The American Petroleum Institute (API) reported a decrease of 6.75M barrels in the week ending May 29, compared to a revised decline of 2.8M barrels the previous week and exceeding market expectations of a 3.6M drawdown [1]. Analysts, including BNY's Bob Savage, highlighted that war-related and energy-related risks are dominating the macroeconomic narrative, and a sustained period with WTI above $90 per barrel could impact global growth and monetary policy expectations [1]. Investors await the official Energy Information Administration (EIA) data for confirmation of tightening US crude inventories [1].
Meanwhile, Silver (XAG/USD) traded around $74.50, down 0.88% on the day, pressured by a stronger US Dollar and the same US-Iran tensions affecting oil [2]. US forces intercepted Iranian missiles and drones targeting regional facilities before carrying out defensive strikes, which contributed to higher oil prices and renewed inflation concerns [2]. Rising energy prices are fueling inflation expectations, reducing the attractiveness of precious metals like silver, which do not offer yields [2].
Market sentiment was also influenced by US labor data, with the Job Openings and Labor Turnover Survey (JOLTS) showing job openings at 7.618M in April, well above expectations of 6.88M, indicating continued labor market resilience and supporting a cautious stance by the Federal Reserve regarding interest rate cuts [2]. President Trump reiterated that Iran had agreed not to pursue nuclear weapons and that negotiations remain ongoing, but investors remain cautious as the geopolitical situation evolves [2]. Market attention is now turning to the May Nonfarm Payrolls (NFP) report due Friday [2].
CONCLUSION
Escalating US-Iran tensions and a sharp US crude inventory drawdown have driven WTI oil prices higher, while silver has declined amid a stronger dollar and inflation concerns. The ongoing geopolitical uncertainty and robust US labor data are shaping market expectations for monetary policy and future volatility. Investors remain focused on upcoming US economic reports and further developments in the Middle East.