Iran issues sudden threat! The commodities market becomes active again, spot silver rises over 4%

Middle East Situation Changes Unpredictably!

Although the US and Iran are still in negotiations, uncertainties remain. According to the latest report from CCTV News, Iranian senior commander Sardar Daghighi publicly stated that if the United States launches a military strike against Iran, Israel will become Iran’s primary target. He emphasized that although Iran does not seek war, it is prepared to respond to any aggression.

On the same day that the negotiation arrangements changed, U.S. officials pointed out that within just six hours, the Iranian military took two “highly aggressive” actions against U.S. related ships: first, the Iranian Revolutionary Guard’s fast boats attempted to board a commercial vessel flying the American flag near the Strait of Hormuz; second, on February 3rd, a U.S. military aircraft shot down an Iranian drone approaching the USS Lincoln aircraft carrier in the Arabian Sea.

Influenced by these events, the commodities market became active again, with spot silver rising over 4%, New York silver futures up over 6%, and ICE Brent crude oil up over 0.5%. A-shares experienced a rapid rally in the late trading session, with the Shanghai Composite Index returning to 4100 points. By the close, the Shanghai Composite rose 0.85%, the Shenzhen Component Index increased 0.21%, and the ChiNext Index fell 0.4%. Oil and gas stocks also surged again at the end of the day, with Intercontinental Oil & Gas hitting the daily limit, and companies like QianNeng Hengxin, Zhongman Petroleum, Zhunyou Co., Ltd., Tongyuan Petroleum, Sinopec Oilfield Service, and Shandong Molong all climbing higher.

Negotiations

Xinhua News Agency cited the latest report from Axios News on the 3rd, stating that the Trump administration agreed to hold negotiations with Iran on the 6th in Oman. Axios also quoted an Arab source on Tuesday, indicating that the U.S. government has agreed to Iran’s request to change the negotiation venue from Turkey to Oman.

On February 3rd, Iranian President Ebrahim Raisi stated via social media that, in response to regional friendly governments’ requests, he has instructed the Foreign Minister to conduct fair and pragmatic negotiations with the United States, adhering to principles of dignity and prudence.

According to reports from the Islamic Republic News Agency and other media, Iranian Foreign Ministry spokesperson Bahram Ghasemi responded that Turkey, Oman, and other regional countries had previously expressed willingness to host the negotiations. Iran attaches great importance to this and thanks all friendly countries that are concerned, well-intentioned, and committed to promoting diplomatic progress.

Iran’s Supreme Leader Ayatollah Khamenei’s political advisor, Shamkhani, recently told the media that Iran could reduce the enrichment level of uranium but would not transfer enriched uranium abroad. He reiterated that Iran’s nuclear program is peaceful. Shamkhani said, for example, Iran could lower the uranium enrichment from 60% to 20%, and the uranium could be diluted. If you’re worried about 60% enrichment, it can be diluted, but this comes at a cost. The U.S. must pay a price for this. Since the core concerns can be addressed, there is no reason to ship enriched uranium abroad.

White House spokesperson Jen Psaki stated that she has communicated with Trump’s envoy, Wittekov, regarding the new demands from Iran related to maritime conflicts. She pointed out that U.S.-Iran negotiations are still proceeding as planned, and the U.S. expects to continue dialogue later this week. Psaki also reaffirmed that Trump still prioritizes diplomatic solutions, but diplomacy requires cooperation from both sides, and the U.S. will keep all options open.

Uncertainties

However, there are still significant uncertainties regarding these negotiations. On the same day that the negotiation arrangements changed, U.S. officials pointed out that the Iranian military took two “highly aggressive” actions against U.S. ships within just six hours.

First, the Iranian Revolutionary Guard’s fast boats attempted to board a commercial vessel flying the U.S. flag near the Strait of Hormuz. As U.S. Navy destroyers and Air Force support arrived, the Iranian boats dispersed, and no firefight occurred.

Second, an “unknown intent” Iranian drone approached the USS Lincoln aircraft carrier and was ultimately shot down by an F-35 fighter jet.

Samir Vakit, Director of the Middle East and North Africa Program at Chatham House, analyzed that these incidents might indicate that the hardline factions within Iran’s leadership do not support negotiations.

Additionally, against the backdrop of Trump deploying a large military force in the Persian Gulf, Iran’s latest demands and military actions could cause the White House to deviate from diplomatic routes, further increasing the risk of military conflict.

U.S. Central Command spokesperson Hawkins stated that Iran’s ongoing harassment and threats in international waters and airspace will not be tolerated. Iran’s unnecessary aggressive actions around U.S. military, regional partners, and commercial ships are increasing the risk of collisions, misjudgments, and regional instability.

Another uncertainty involves Israel. According to a report from Xinhua News Agency in Jerusalem on February 3, Israeli Prime Minister Netanyahu met with U.S. Special Envoy Wittekov in Jerusalem. Israeli media reported that Israel is requesting the U.S. to have “freedom of action” regarding Iran.

From the current market reactions, gold prices and international oil prices surged again today, with gold surpassing $5,100 per ounce; silver also rose over 5%, breaking through $87. The market appears to be cautious about potential conflicts in the Middle East.

(Source: China Securities Journal)