Oil Prices Surge to $115 per Barrel Amid Supply Disruption and US-Iran Tensions

Oil Prices Rise Amid Persistent Concerns Over Supply Disruptions in Middle East

Oil prices extended gains on Monday, April 6, as persistent concerns over supply disruptions caused by shipping issues in the key Middle Eastern producing region continued to dominate the market. The US-Iran war has led to a significant increase in crude oil prices, with Brent crude futures rising by $1.71, or 1.6%, to reach $110.74 per barrel. Meanwhile, US West Texas Intermediate crude futures rose above $115 per barrel.

In the Indian market, crude oil prices on the Multi Commodity Exchange (MCX) were trading marginally higher by 0.16% at ₹10,422 per barrel. The ongoing conflict has caused an unprecedented supply shock, leading to a global energy crisis. Oil and fuel prices have surged, fuelling inflation, weakening economic growth, and increasing pressure on businesses and consumers.

US President Donald Trump's Threats Escalate Tensions

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US President Donald Trump has been warning of bringing "hell" upon Iran through a series of sharp social media remarks. Tehran has dismissed the latest demands, while the crucial waterway remains largely shut, with only a limited number of vessels allowed through. Trump has also announced plans to hold a press conference at 1 p.m. on Monday and referenced a Tuesday 8 p.m. Eastern Time deadline without clarifying its purpose.

Key Dates and Deadlines

• March 26: US President Donald Trump gave Iran a 10-day ultimatum to reopen the Strait of Hormuz, a deadline that expires on Monday evening.
• Monday, April 6: Trump's 10-day ultimatum expires, and the situation remains critical.

Impact on Global Oil Markets

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Control over the Strait of Hormuz, a vital route linking the Persian Gulf to global markets, particularly in Asia, remains a focal point of the conflict. Tehran has asserted control over the passage, allowing only a handful of ships to pass, including a French container vessel, a Japanese-owned tanker, and ships from Malaysia and Pakistan. Iran has also announced that Iraq would be exempt from the restrictions in the strait, which could lead to an increase in oil shipments.

Expert Analysis

According to Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, the deep backwardation in WTI and Brent futures signals acute supply stress, with nearly 10% of global crude offline and inventories draining fast. Banerjee predicts that even if flows start normalising by late April, full restoration will take two to three months. Meanwhile, Ponmudi R, CEO of Enrich Money, said that NYMEX Crude Oil is trading near the $110-$112 zone after a strong rally, indicating sustained bullish momentum on higher timeframes.