Gold prices eased on Monday as recent US-Iran strikes in the Gulf pushed oil prices higher, while expectations of US Federal Reserve interest rate hikes further weighed on the non-yielding metal, Reuters reported.
Spot gold was down 0.8% at $4,057.77 per ounce, as of 0602 GMT. US gold futures for August delivery lost 0.6% to $4,072.20. The metal was headed for a fourth consecutive monthly loss of 10.5%.
“US and Iran were at it again over the weekend, with fresh military strikes reported from both parties, which casts further doubt over how long oil can stay at these subdued levels and therefore over the broader inflation and interest rate outlook,” said Tim Waterer, chief market analyst at KCM Trade.
Oil prices rose after Iran launched missiles and drones at US military sites in Kuwait and Bahrain early on Sunday, shortly after US President Donald Trump threatened to wipe out the Iranian leadership if they did not stick to the agreement to end their war.
However, Tehran and Washington agreed to halt recent hostilities in the Gulf and renew talks regarding their dispute over the Strait of Hormuz, Axios reported on Sunday.
Elevated crude oil prices can fuel inflation and chances of interest rate hikes, and while gold is typically seen as an inflation hedge, it loses its appeal as a non-yielding asset in a high interest-rate environment.
Traders expect three Fed rate hikes this year and are pricing in an about 80% chance of a December increase, according to the CME FedWatch Tool.
Investors are now looking out for June’s ADP employment data and the US nonfarm payrolls data, both due later this week, to further gauge the Fed’s monetary policy stance.
“Gold could see the $5,000 level again this year but this would be based on further de-escalation, oil having a sustained move to pre-war levels to dull the inflationary impact of the conflict, and a softer dollar,” said Waterer.
Spot silver fell 0.9% to $58.64 per ounce, while platinum gained 0.1% to $1,616.55 and palladium rose 1% to $1,221.29.
Crude prices may be back near levels seen before the Iran war, but the surge in oil exports from the Middle East following the reopening of the Strait of Hormuz is creating a chaotic market that could take months to settle. The steep slide in Brent crude back to pre-war levels of around $73 a barrel following the US-Iran interim deal might, at first glance, suggest business as usual has returned to the world’s most important oil and gas hub. The narrow waterway, which once carried about a fifth of global oil and gas, had been effectively paralyzed by conflict for more than 100 days, Ron Bousso, a columnist for Reuters says.
But beneath the surface, the market is anything but orderly. What looks like normality is a system trying to reboot all at once. First, there’s the race to liberate trapped volumes. Dozens of tankers stranded inside the Gulf during the war have rushed to leave in recent days. US Energy Secretary Chris Wright said flows briefly exceeded pre-war levels of around 20 million barrels per day, though ship-tracking data suggests overall traffic remains far below the roughly 125 daily crossings seen before the conflict. Some vessels appear to be disabling tracking systems during transit, further clouding the picture.
Whatever the precise numbers, one thing is clear: more Middle Eastern oil is hitting the market.
But clearing outbound cargo is only half the equation.
Inbound tankers are needed to load crude sitting in onshore storage, a key step in allowing producers to restart fields and refineries shut during the war. Without that inflow of vessels, the recovery in supply cannot proceed smoothly.
The constraint should be short-lived. Consultancy Rystad Energy estimates that shut-in production across the Gulf fell to 9.6 million bpd by mid-June from 11.7 million bpd three weeks earlier, and the region is now expected to return to pre-war output by December. Perhaps an even bigger factor complicating the supply outlook is Iran. Tehran is expected to quickly ramp up oil production after the US suspended most sanctions restricting Iran’s oil exports and sales.
Iran’s oil output could reach 3.3 million bpd by year-end, above pre-conflict levels, if the sanctions relief stays in place, according to Rystad.
Logistics aside, a flood of oil appears likely to hit markets.
FROM SHORTAGE TO GLUT
That surge is running headlong into weak short-term demand. Refineries in Asia and Europe have already largely secured their crude supplies for July and August, leaving the extra barrels with nowhere to go.
Many tankers may therefore have little choice but to remain at sea, effectively turning into floating storage and keeping those barrels off the market for weeks. Having endured the largest oil supply shock in history, the market may soon face the opposite problem.
Indeed, investors appear to be pricing in a short-term “mini glut.” Last week, August Brent futures traded below the September contract, flipping into a market structure, known as contango, for the first time since the war began on February 28.
That contango could persist for several weeks as the backlog of oil trapped in the Gulf is gradually cleared. But it is unlikely to last. Once flows normalize, the market will require enormous volumes of crude to both meet recovering demand in Asia and refill inventories around the world that have been depleted during the conflict.
Does that mean supply and demand will easily shift back into balance? Probably not.
While global supply is forecast to fall by 3.9 million bpd in 2026, it is expected to rebound by about 8 million bpd in 2027 to roughly 110.3 million bpd, according to the International Energy Agency.
Demand, by contrast, is expected to recover far more modestly, creating a potential surplus of roughly 5 million bpd next year.
This scenario may not play out, given the physical constraints of the oil supply chain, but the scale of the potential supply-demand mismatch suggests the market faces a very bumpy ride ahead.
LINGERING RISKS
While exports may be surging now, concerns about the future of the Strait of Hormuz are already resurfacing.
Under the US-Iran interim deal, transit through the waterway is supposed to be unimpeded and toll-free for 60 days, while Tehran negotiates with Oman over a longer-term framework to govern traffic. That temporary arrangement leaves plenty of room for uncertainty.
A stark reminder came in recent days, when Iranian forces fired on a Taiwanese cargo vessel transiting the strait on Thursday, sparking a round of tit-for-tat strikes with the United States. The incidents appeared less an escalation than a signal: Tehran intends to assert its authority through the newly created Gulf Strait Authority.
Although traffic resumed quickly after the incident, many shipowners and charterers are likely to remain wary of sending vessels back into the Gulf.
That caution is already showing up in flows. For every four tankers leaving the region last week, only one entered, far below pre-war levels, according to LSEG data.
Markets appear to be shrugging off concerns about political risks, logistical problems or lasting changes in the region.
But after months of severe disruption, the road back to balance is unlikely to be smooth. That suggests today’s market optimism might be overdone.
Saudi Arabia recorded a trade surplus of SAR90.5 billion during the first quarter (Q1) of 2026, marking a year-on-year increase of 43.7%. The surplus increased by more than SAR27 billion compared with the same period in 2025, when it stood at approximately SAR63 billion, according to the General Authority for Statistics’ International Trade Bulletin for March, SPA reported .
The data showed that the trade surplus increased by 60% on a quarterly basis. It rose by more than SAR33.9 billion compared with the fourth quarter of 2025, when the surplus totaled approximately SAR56.5 billion. On a monthly basis, the trade surplus continued to grow in March 2026. It increased by 200.9%, rising by more than SAR38 billion compared with February, when the surplus stood at approximately SAR19.1 billion.
According to the data, Saudi Arabia’s total international trade exceeded SAR535 billion during Q1 2026, achieving year-on-year growth of 4.5%. This represents an increase of approximately SAR22.9 billion compared with the same period last year, when total trade reached SAR512.3 billion. Total merchandise exports in Q1 2026 reached approximately SAR312.8 billion, compared with imports of approximately SAR222.3 billion. National exports, including oil and non-oil exports, totaled SAR274.5 billion.
The data also showed that the value of re-exports exceeded SAR38 billion during the first quarter, achieving year-on-year growth of 32.9%. This represents an increase of more than SAR9 billion compared with the corresponding period last year, when re-exports totaled around SAR28.8 billion.
Among trading partners, Asian countries ranked first among importers of Saudi exports, with a value exceeding SAR229.2 billion. They were followed by European countries with more than SAR47 billion, African countries with SAR22.5 billion, and countries in the Americas with approximately SAR12.6 billion. China remained the largest importer of Saudi exports during the first quarter, with imports valued at SAR44.8 billion.
Regarding non-oil exports, including re-exports, shipments passed through 32 land, sea, and air customs ports, with a value exceeding SAR86.1 billion. King Abdulaziz International Airport in Jeddah ranked first, handling exports valued at SAR17.5 billion, followed by Jeddah Islamic Port with exports exceeding SAR12 billion.
These results reflect the continued strength of Saudi Arabia’s foreign trade performance, supported by growth in national exports and re-exports, alongside expanding commercial activity and stronger trade relations with countries around the world.
As international trade faces mounting disruptions, Japan’s Ambassador to Saudi Arabia, Yasunari Morino, revealed that Riyadh and Tokyo are engaged in intensive consultations aimed at strengthening the resilience of energy and critical materials supply chains against current regional tensions. He stressed that energy security is no longer merely a conventional issue, but has become a strategic priority requiring greater cooperation and closer coordination.
In an exclusive interview with Asharq Al-Awsat, Morino said Japan highly appreciates Saudi Arabia’s leading role in promoting de-escalation across the region and advancing diplomatic solutions to conflicts, as well as its pivotal role in ensuring the stability of the global oil market. He reaffirmed Tokyo’s commitment to expanding bilateral ties across various sectors, moving beyond the traditional scope of oil trade and petrochemicals toward broader opportunities in technology and investment.
The Saudi-Japanese Business Council held a meeting in Riyadh several days ago at the Federation of Saudi Chambers to discuss ways to enhance business cooperation between the two countries and review the current business environment.
Morino said the long-standing economic relationship between Saudi Arabia and Japan is a source of shared pride, noting that Saudi crude oil supplies are critically important to Japan, while Japanese investments in the Kingdom’s petrochemical sector are substantial.
“As Saudi Arabia embarks on ambitious structural reforms to diversify its economy, Japan is exploring new opportunities to expand our economic relationship in line with the Japan-Saudi Vision 2030 launched in 2017, which complements Saudi Vision 2030,” he said.
The ambassador added that bilateral cooperation holds significant promise in advanced technologies, including artificial intelligence, healthcare, entertainment, sports, and food. He noted that the strategic importance of the relationship was further strengthened after the two governments agreed in February to establish the Strategic Partnership Council, co-chaired by Saudi Crown Prince and Prime Minister Prince Mohammed bin Salman and the Prime Minister of Japan.
He also expressed Japan’s strong interest in contributing to the success of Riyadh Expo 2030, particularly as Japan handed over the hosting torch of the global event to the Kingdom.
Trade by the Data
Morino highlighted official data reflecting the depth of trade ties between the two countries.
Trade in December 2025: Saudi exports to Japan reached SAR22.7 billion ($6 billion), accounting for 11.7 percent of the Kingdom’s total exports that month. The exports were mainly mineral fuels and organic chemicals. Saudi imports from Japan totaled SAR3.6 billion ($960 million), representing 4.3 percent of total imports, led by vehicles and parts, followed by machinery and mechanical equipment.
Full-year 2025 exports: Saudi exports to Japan totaled SAR133.3 billion ($35.5 billion), led by mineral fuels and oils worth SAR129.8 billion ($34.6 billion), followed by organic chemicals valued at SAR1.2 billion ($320 million), and copper and copper products worth SAR936.1 million ($249.6 million).
Annual imports from Japan: Saudi Arabia imported goods worth SAR38.2 billion ($10.1 billion) from Japan in 2025. Vehicles and parts ranked first at SAR26.6 billion ($7 billion), followed by boilers, machinery, and mechanical equipment at SAR3.9 billion ($1 billion), and electrical equipment at SAR1.8 billion.
Non-oil exports and foreign direct investment
On the growth of non-oil trade, Morino said Saudi non-oil exports to Japan reached SAR47.7 million ($12.7 million) in April 2026. The main exports included base metals and articles thereof worth SAR35.4 million ($9.4 million), plastics and rubber worth SAR5.8 million ($1.5 million), and chemical products worth SAR4.4 million ($1.1 million).
On investment, Morino said Japan’s foreign direct investment stock in Saudi Arabia declined slightly to SAR23.1 billion ($6.1 billion) at the end of 2024, compared with SAR23.6 billion ($6.2 billion) in 2023. He said joint investments are expected to expand in the future, supported by new initiatives and agreements between the two countries.
