Crude Crude oil outperformed the rest of commodities complex on Wednesday as western countries agreed on further sanctions against Iran related to its nuclear programme. The news overshadowed market jitters related to lingering eurozone crisis and the price of front month contract on Brent leapt to the highest level since mid November 2011. According to recent news, EU reached preliminary agreement to ban imports of crude oil from Iran. Quite importantly, crisis-most-severely-hit Greece did not raise significant objections against the embargo although the country gets more than one third of its overall oil imports from Iran. Let us add that about 17% of Iranian oil exports are heading to Europe which is the second largest share after China. Base Metals The stronger US dollar and higher risk aversion weighed on base metals prices yesterday. LME benchmark copper (3M) lost more than 3% and at the time of writing is even hovering at 7500 USD per ton (USD/t) level. Nevertheless, one might expect more vital Chinese demand at these levels as imports of the metal have soared to the highest levels since early 2010 in recent months. We estimate that the price of copper might on average stay close to current levels (i.e. 7500 USD/t) in Q1/2012. Precious Metals Despite the fact that Asian demand for gold seems to be muted in the first days of 2012, the metal posted some gains on Wednesday and remained relatively steady above 1600 USD per troy ounce. Looking ahead, Lunar New Year holiday (starts at Jan 23) might spur buying interest in sessions ahead.

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