Crude oil prices continued their downward trajectory as renewed diplomatic initiatives revived market optimism that the Iran conflict will not escalate, while copper posted its strongest closing level ever and gold extended gains on easing inflation concerns. Traders focused on US monetary and trade policy signals, along with indications of tightening supply in the metals complex.

Crude Oil: Prices Keep Falling as Diplomatic Efforts Ease Iran Tensions

Oil prices sustained their decline, driven by fresh diplomatic maneuvers that rekindled expectations the Iran war will not intensify, while Washington's latest plan to ramp up economic pressure on Tehran stopped short of imposing stricter measures on the nation's trading partners.

Brent crude dropped nearly 4% to settle below $89 per barrel, marking its lowest level in over a week, while West Texas Intermediate (WTI) closed above $82 per barrel. A series of developments alleviated trader concerns about a renewed escalation in hostilities that could further disrupt shipping through the Strait of Hormuz, keeping prices under pressure.

As market participants grew increasingly hopeful that diplomatic efforts would yield progress, oil prices sank to fresh lows in post-settlement trading. Pakistan's army chief concluded a one-day visit to Iran, with Iranian media reporting that the trip achieved valuable outcomes. Additionally, according to Oman's state news agency citing a joint statement from Iran and Oman, the two sides discussed a "temporary framework" aimed at restoring shipping through the Strait of Hormuz.

Investors largely brushed off the US announcement on Monday of intensified economic pressure against Iran, as the Trump administration did not impose secondary sanctions on countries that trade with Tehran, including major buyers of Iranian crude. Haris Khurshid, chief investment officer at Karobaar Capital LP, noted: "The market had high expectations for this announcement, but what ultimately emerged was more of a policy direction warning rather than an immediate move to disrupt physical supply."

Brent for October delivery fell 3.9% to settle at $88.58 per barrel, while WTI for October delivery dropped 3.1% to settle at $82.36 per barrel.

Base Metals: Copper Hits Record Close

Copper achieved its highest closing price ever as traders weighed US monetary and trade policies alongside signals of tighter supply. The metal oscillated between small gains and losses before finishing up 0.5% at $14,349.50 per metric ton, just shy of its intraday record high. Most other base metals also advanced.

Copper has climbed approximately 16% this year, supported by trading mismatches that have kept London Metal Exchange (LME) inventories at relatively low levels. At the close, LME copper advanced 0.5% to $14,349.50 per ton, while LME aluminum rose 0.3% to $3,238 per ton, LME nickel edged up 0.1% to $17,042 per ton, LME zinc gained 1.4% to $3,890 per ton, and LME tin added 0.2% to $55,852 per ton. LME lead, however, slipped 0.3% to $1,905 per ton.

Precious Metals: Gold Gains on Cooling Inflation Worries

Gold extended its advance as inflation concerns subsided, with the metal climbing intraday to near $4,700 per ounce, its highest intraday level since mid-May. The diplomatic discussions between Iran and Oman over a potential "temporary framework" to restore Strait of Hormuz shipping eased worries about the Iran situation, contributing to lower oil prices.

As of 6:11 p.m. Eastern Time, spot gold was up 0.1% at $4,657.17 per ounce, while spot silver slipped 0.4% to $68.659 per ounce.