Crude Oil Prices Rise 6% Following US-Iran Tensions Escalation

Global Tensions Escalate: Oil Prices Surge Over 6% Amid Ongoing US-Iran Conflict

The global oil market experienced a significant surge on Monday, with Brent crude futures climbing 6.76% to reach $96.49 per barrel, while US West Texas Intermediate rose 7.79% to $90.38 a barrel. This upward movement was triggered by reports that the Strait of Hormuz had been shut once again, following mutual accusations from the US and Iran of breaching the ceasefire by attacking ships.

Key Developments

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The closure of the Strait of Hormuz, which facilitates about one-fifth of global oil shipments, led to a sharp increase in oil prices. The US military intercepted and took control of an Iranian cargo vessel that attempted to breach its blockade, further escalating tensions. Meanwhile, Iran announced it would skip a second round of peace negotiations, despite US President Donald Trump's warning of possible renewed airstrikes.

The United States has continued enforcing its blockade of Iranian ports, while Iran has alternated between lifting and reinstating its own restrictions on the Strait of Hormuz. On Friday, both contracts recorded their steepest single-day losses since April 18, after Iran stated that all commercial vessels could pass through the Strait of Hormuz during the remaining ceasefire period. However, this announcement was later disputed by Trump, who said Iran had committed to keeping the strait open permanently.

Market Outlook

According to Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, crude oil prices are likely to remain purely headline-driven, with geopolitical developments dictating intraday volatility until the deadline. From a technical standpoint, the $90 per barrel level serves as a crucial support zone, while resistance is seen at $100 per barrel and $104 per barrel.

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On the other hand, Ponmudi R, CEO of Enrich Money, said that MCX Crude Oil futures witnessed a highly volatile week, plunging sharply from the highs near ₹9,850 to a weekly low of ₹7,258 before settling near the ₹7,725 zone amid easing Middle East tensions. The aggressive sell-off has decisively broken the ascending trendline structure, shifting the near-term bias firmly in favor of sellers.