US-Iran Tensions Trigger 6% Surge in Crude Oil Futures on MCX Amid Global Disruption

Global Crude Oil Prices Rally Amid US-Iran Conflict

Market Update

On Monday, February 2, Multi Commodity Exchange (MCX) Crude Oil March 19 Futures surged 6% to ₹3,645.7, driven by escalating US-Israeli conflict with Iran and concerns over an effective shutdown of the Strait of Hormuz. Meanwhile, Brent Crude prices surged as much as 13% to climb above $82 per barrel, its highest level since January 2025.

Market Analysis

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The Strait of Hormuz, a critical chokepoint off Iran's coast, carries about a fifth of global oil supplies and significant volumes of gas. Tanker movement through the strait has largely come to a standstill, with shipowners and traders voluntarily pausing operations amid the escalating conflict.

OPEC Response

In response to the expanding tensions, the Organization of the Petroleum Exporting Countries (OPEC) agreed to increase output quotas next month by 206,000 barrels per day. This decision aims to mitigate the impact of the conflict on global oil supplies.

Impact on India

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According to brokerage firm JM Financial Institutional Securities, Brent Crude prices have already moved to a 7-month high. Scenario analysis suggests that Hormuz disruption could push prices above $90/bbl, while a broader regional conflict could take crude beyond $100/bbl. This could have a direct impact on India's trade balance, with every $1 rise in crude increasing the annual import bill by $2 billion.

Macroeconomic Impact

Brokerage firm Emkay Research highlighted that the likely spike in crude prices will hurt macro-financial stability by putting pressure on the currency, current account deficit, and domestic inflation. The firm expects corporate margins to take a hit, with petrol/diesel prices spiking Rs0.52/Rs0.55 per liter for every $1/bbl increase in crude. This could lead to cuts in excise duties, resulting in a fiscal hit of Rs150 billion per annum.