Crude markets swung sharply this week, first surging on renewed US airstrikes against Iran before retreating on Wednesday as tentative signs of diplomatic progress and easing Strait of Hormuz fears took hold. Tuesday’s 4% rally, which pushed Brent close to $100 a barrel, collapsed after the US military launched fresh drone attacks in southern Iran, violating a fragile April ceasefire. By Wednesday morning, however, prices had sunk by roughly 2% — Brent to near $98 and West Texas Intermediate to around $92 — as traders seized on the passage of two supertankers through the strategic waterway and cautious optimism in Qatar-brokered talks.

Precious metals followed a less volatile but similarly cautious path. Gold, which had gained on Tuesday in a flight to safety, edged lower on Wednesday, with spot prices dipping to around $4,500 an ounce. Investors were also positioning ahead of US personal consumption expenditure data due Thursday and a clutch of Federal Reserve speeches, seeking clues on the trajectory of American monetary policy. A softer dollar provided some floor, yet the overall bias remained cautious.

The diplomatic picture remained fractured along predictable fault-lines. Viewed from Washington, the airstrikes were described as defensive and limited, intended to signal resolve while negotiations with Iran continued. Tehran, however, condemned them as a ceasefire violation and insisted its indirect contacts with the United States were still alive, with a notable disclosure that Iran’s stockpile of highly enriched uranium was not on the agenda. In Moscow, analysts noted the immediate market impact of supertanker movements through Hormuz, a chokepoint that handles a fifth of global crude flows, as the first tangible evidence that the route might not be fully blockaded after all.

As the week progresses, the interplay between geopolitical risk and monetary policy will dominate. The US PCE inflation reading and remarks from Fed Vice Chair Philip Jefferson and Governor Lisa Cook will test gold’s appeal as an interest-rate hedge. For oil, the premium attached to Middle East disruption is unlikely to vanish completely; full reopening of the Strait of Hormuz remains, as one Russian dispatch put it, a matter of ‘months, and possibly quarters’. Traders in multiple financial centres thus face a familiar but fraught calculation: distinguishing between diplomatic noise and the real cost of war.