Crude Oil Price Holds Steady Amid US-Iran Tensions, Near-Term Outlook Uncertain

Global Oil Prices Steady Amid US-Iran Tensions

Oil prices remained largely unchanged on Monday, 4 May, as traders questioned the feasibility of the US proposal to escort neutral vessels through the Strait of Hormuz. The proposal, put forth by US President Donald Trump, has been met with skepticism following reports of a tanker being struck in the key waterway.

Brent crude prices hovered near $108 a barrel, having dropped as much as 2.4% at the open, while West Texas Intermediate (WTI) prices remained near $102. Back home, crude oil prices on the Multi Commodity Exchange (MCX) surged as much as 0.44% to ₹9,715 per barrel.

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The ongoing conflict between the US and Iran has led to continued disruptions to traffic through the Strait of Hormuz, with oil prices holding above $100 per barrel. Talks between the two countries carried on over the weekend, with both sides reviewing each other's responses.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC+) announced on Sunday that it would raise oil output targets by 188,000 barrels per day in June for seven member nations, marking the third straight monthly increase. However, much of the additional supply is expected to remain notional as long as the ongoing conflict continues to disrupt oil flows through the Strait of Hormuz.

The conflict, which began in late February following US and Israeli strikes on Iran, was framed by Washington as a move to curb Tehran's potential threat stemming from its nuclear programme. In early March, the US president had stated that naval escorts would be deployed to ensure the safe transit of oil tankers.

According to Ponmudi R, CEO of Enrich Money, crude oil traded with heightened volatility through the week but retained a firm undertone, holding near elevated levels as concerns around potential supply disruptions persisted. The market continues to price in risks to global oil flows, limiting meaningful downside and providing support on dips.

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On the technical outlook, Ponmudi noted that MCX Crude Oil witnessed a volatile week, staging a sharp recovery from lows near ₹8,900 and surging to highs above ₹10,500 before pulling back sharply to trade near the ₹9,600 zone, with extreme swings driven by ongoing developments in the Middle East tensions.

Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, believes that in the immediate term, three doors are open and only one will swing through. "Iran capitulates, and a deal is struck — barrels return, prices unwind, risk assets rally. Iran refuses to be starved out and strikes first at tankers, infrastructure, or the Strait — the supply hole doubles overnight and crude spikes violently. Or Israel pre-empts unilaterally — Washington's 'buy time' calculus collapses, and the region goes vertical," he said.

Banerjee sees resistance for crude oil prices at $125, and a sustained break opens $135-140, while support sits at $100. "As long as Hormuz remains throttled and the US naval blockade on Iran holds, the war premium stays bid,” Banerjee said.