Crude Oil Prices Surge After Collapse of US-Iran Diplomatic Talks

US-Iran War Escalation Sends Crude Oil Prices Soaring

Crude oil prices jumped over 8% on Monday, April 13, as the US Navy moved to block vessels from accessing Iran through the Strait of Hormuz, a step that could curb Iranian oil exports after Washington and Tehran failed to reach an agreement to end the conflict.

Brent crude futures climbed $6.71, or 7.05%, to $101.91 a barrel, rebounding after a 0.75% decline on Friday. Meanwhile, US West Texas Intermediate rose $7.59, or 7.86%, to $104.16 a barrel, following a 1.33% drop in the previous session. The Multi Commodity Exchange (MCX) also witnessed a similar upward movement today, with crude oil prices surging nearly 7.4% to ₹9,830 per barrel.

The escalating tensions between the US and Iran are primarily driving the surge in crude oil prices. On Sunday, Donald Trump announced that the Navy would begin blockading the Strait of Hormuz, escalating tensions after prolonged talks with Iran failed to secure a deal to end the war, putting a fragile two-week ceasefire at risk. The blockade is expected to take effect at 10 a.m. ET (1400 GMT) on Monday, covering all maritime traffic entering or leaving Iranian ports.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The US Central Command (CENTCOM) clarified that the measures would be applied impartially to vessels of all nations operating in Iranian coastal areas, including ports along the Arabian Gulf and the Gulf of Oman. However, ships passing through the Strait of Hormuz en route to or from non-Iranian ports would not face restrictions. Iran's Revolutionary Guards warned that any military vessels approaching the strait would be viewed as violating the two-week ceasefire with the US and would face a strong and decisive response.

The crude oil prices outlook for the coming weeks is uncertain. Ponmudi R, CEO of Enrich Money, noted that crude oil futures are currently trading near the ₹9,150 zone after a sharp and volatile decline from the week's high near ₹11,000. Immediate resistance is placed at the ₹9,350-₹9,400 zone, and a sustained breakout above this range could trigger a recovery toward ₹9,800-₹10,000 levels.

Global investment bank Goldman Sachs has revised down its price outlook for the second quarter of 2026, cutting its forecasts for Brent crude and US crude to $90 and $87 per barrel, respectively, following a two-week ceasefire between the US and Iran. The bank noted that the reduction in the risk premium at the front of the curve and already edging up oil flows through the Strait of Hormuz have led to the downward revision of its Q2 forecast.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline