Oil Prices Rally as US-Iran Deal Prospects Fade; Copper Nears Record High

Energy — US-Iran Deal Obstacles

Oil prices rallied, with ICE Brent settling 3.8% higher and moving back above $82/bbl. The gains extended into early morning trading the following session.

Developments over the preceding 24 hours underscored once again that US-Iran negotiations are unlikely to proceed smoothly. Reports suggest Iran wants to ban US and Israeli ships from the Strait of Hormuz, while also seeking compensation from hostile countries before they can resume using the waterway. Additionally, Iran wants to charge fees for ships transiting the Strait of Hormuz, structured as service fees rather than standard tolls. The strait carries roughly a fifth of global oil consumption, making any disruption a direct risk to supply security. The lack of apparent room for compromise makes a sustainable agreement more difficult to reach.

Despite signs of progress in recent days, the tone of rhetoric and growing distrust between the US and Iran mean the situation could deteriorate once again. ING maintains its view that oil flows will begin to normalise through the third quarter, with Brent expected to average $80/bbl for the quarter, though significant risk and uncertainty surround this outlook.

Saudi Arabia cut its official selling prices (OSPs) for nearly all crude grades and to all destinations for September loadings. Arab Light into Asia was reduced by $0.50/bbl to a $2/bbl discount to the benchmark. Asian buyers had been pushing for OSP reductions amid the Red Sea escalation, which has forced some tankers to take longer, more expensive shipping routes around Africa. The cuts signal Saudi Arabia's willingness to defend market share in Asia at a time when competing Gulf producers and discounted Russian crude have been vying for the same buyers.

Metals — Copper Nears Record High

Copper traded near record highs, with LME prices comfortably above $14,000/t, driven by tariff-related stockpiling into the US and increasingly tight physical conditions outside the country. The latest upward move was also fuelled by reports that the Democratic Republic of Congo (DRC) had moved to restrict exports of copper concentrates. The DRC is one of the world's top three copper producers, so any supply policy shift there carries weight for global availability. While the headlines initially raised supply concerns, the impact on the refined market is likely to be limited, as most DRC copper is exported as cathode rather than concentrate. Even so, the news reinforced an already firm market backdrop characterised by low inventories, tight concentrate availability, and ongoing supply disruptions.

Copper fundamentals remain supportive: tight physical markets, low inventories, and constrained mine supply should continue to underpin prices. Demand from energy-transition applications — including electric vehicles, power grids, and renewable installations — continues to grow as a structural driver alongside traditional construction and manufacturing uses. However, with copper trading close to record highs, any disappointment on US tariff measures could trigger a period of consolidation.

In other base metals, nickel fell towards its lowest level since mid-July following reports that Indonesia may grant additional ore production quotas to a major producer. Indonesia is the world's largest nickel producer, and its policy decisions effectively set the tone for global supply expectations. The prospect of higher Indonesian output renewed oversupply concerns and reinforced expectations that the nickel market will remain comfortably supplied through the second half of the year. ING remains cautious on nickel, noting that continued Indonesian supply growth is likely to keep the market in surplus and limit upside potential.

Agriculture — UNICA Reports Lower Sugarcane Crush

The latest fortnightly report from the Brazilian Sugarcane and Bioenergy Industry Association (UNICA) shows that sugarcane crushing in Central-South Brazil stood at 69.8mt in June, down 14.5% year-on-year. Sugar production fell 26.3% YoY to 3.9mt, as mills diverted more cane towards ethanol production. Brazil is the world's largest sugar producer and exporter, so shifts in its output mix have an outsized influence on global supply. Sugar prices spent much of the year trading below ethanol parity, pushing producers to increase their ethanol mix. Around 44.5% of cane was allocated to sugar production, down from 52.3% in the same period a year ago.

Cumulative sugar production so far this season stands at 10.8mt, down 12.4% YoY, while the cumulative cane crush has risen 3.8% YoY to 214.5mt.

Data from Cameroon's National Cocoa and Coffee Board shows that cocoa output fell 20% YoY to 247.9kt in the 2025/26 season — the lowest level in five years, reversing the record harvest produced a year prior. The decline was primarily driven by adverse weather conditions, ageing plantations, and deteriorating soil fertility. Cameroon is one of West Africa's major cocoa producers, a region that supplies the bulk of the world's cocoa beans. Cocoa exports fell 34.7% YoY to 125.5kt, while domestic grindings declined 13.1% YoY to 95.9kt.

Source: ING via Hellenic Shipping News