Oil prices surged this week, with ICE Brent breaking above $100/bbl for the first time since May, as escalation in the Persian Gulf and fears of a widening conflict put a significant amount of supply at risk, ING commodities strategists Warren Patterson and Ewa Manthey wrote in a note. Houthi attacks on Saudi vessels in the Red Sea have the potential to widen the conflict further, they said, while President Trump has said he will hold Iran responsible for attacks on shipping and suggested a ratcheting-up of strikes.

"With little-to-no sign of de-escalation, the market is likely to take the path of least resistance for now," the ING pair wrote, adding that the key question is at what price pressure begins to build on the Trump administration to return to the negotiating table – historically, they noted, that pressure has tended to grow once Brent nears $120/bbl. They flagged that supply disruption now is larger than at any point in the war: Saudi Yanbu exports averaged around 4.6mn barrels a day in June, Kazakh flows from the CPC terminal in Russia – which have exceeded 1.7mn b/d in recent months – are being disrupted by alleged Ukrainian tanker attacks, and Russia is weighing a one-month extension of its diesel export ban, due to expire at the end of July.

Gold, meanwhile, has struggled to attract safe-haven demand despite the escalating conflict, the ING analysts said, with markets instead focused on the inflationary implications of higher oil prices and the prospect of higher-for-longer interest rates; bullion is hovering around the closely watched $4,000/oz support level.