Crude oil trades above $107/bbl as investors focus on the cost of US-Iran conflict; gold up 0.3%

Crude oil prices were trading above $107 per barrel (bbl) during the early market hours on Wednesday, May 13, as investors focused their attention towards the cost of the conflict between the United States and Iran in West Asia.

Latest media reports shared that the reality of the impact from the West Asia conflict has surpassed the Pentagon’s expectations, coming at around $29 billion, compared to the $25 billion estimates.

The global benchmark Brent crude oil prices surged to $108.45 per bbl during Tuesday’s market session, after opening at around $104 per bbl level on the rising concerns over the fragility of the ceasefire deal between the United States and Iran after President Trump’s comments.

The West Texas Intermediate (WTI) crude oil prices rose to $102.72 per bbl during Tuesday’s market session after opening around $98 per bbl levels. The oil prices remained volatile this week due to the absence of a potential peace deal between the nations in conflict.

Oil prices today

At 7:47 am (IST), the Brent crude oil prices were trading 0.65% lower at $107.07 per bbl on Wednesday, compared to $107.43 per bbl at the previous commodity market close, according to Investing.com data.

The WTI crude oil prices were trading 0.60% lower at $101.57 per bbl on May 13, compared to $102.18 per bbl at the previous market close, according to the exchange data.

Factors driving oil prices today

Oil prices were trading higher on Wednesday’s market, India time, as the investors failed to witness any relief or positive cues from the dynamic developments in West Asia.

According to a CNN report, senior officials at the Pentagon, in a House Appropriations Committee hearing, said that the updated repair and replacement of equipment costs, along with the general operational costs, have resulted in the impact estimates rising to $29 billion.

“So, at the time of testimony from, it was $25 billion but the joint staff team and the comptroller team are constantly looking at that estimate, and so now we think it’s closer to 29. That’s because of updated repair and replacement of equipment costs, and also just general operational costs to keep people in theater,” said Jay Hurst, according to the news report. Hurst further said that the $29 billion figure does not include the cost of damages to the US bases in West Asia.

Local media reports highlighted that Iran’s oil exports have been stalled for 28 days amid the US naval blockade in the Strait of Hormuz, resulting in an oil supply disruption for the nation.

These factors, along with Trump’s commentary on the “weak” ceasefire deal, have resulted in the rising tensions among global investors and, in turn, have fuelled the oil prices and the demand for safe haven assets in the market.

Gold prices today

The New York Mercantile Exchange-based COMEX gold prices were trading 0.38% higher at $4,705.20 per ounce as of 10:41 pm (ET) in the United States, compared to $4,686.70 per ounce at the previous commodity market close, as per official data.

Gold prices were rising on Wednesday’s market, India time, as the US dollar rate remained flat amid the mixed global cues. Traders tend to buy more of precious metals like gold if the dollar rate is steady or lower, as they will be able to purchase a higher quantity at a lower price.

Data collected from the Bloomberg US dollar spot index showed that the greenback was trading 0.01% higher at 98.304 as of 10:43 pm (ET), compared to the previous market close levels.