Crude Oil Futures Surge Nearly 6% as US-Iran Conflict Reignites Supply Fears in Strategic Waterway

Crude Oil Futures Surge Nearly 6% as US-Iran Conflict Reignites Supply Fears in Strategic Waterway​

Crude oil futures witnessed a sharp rally on Monday, driven by renewed military confrontations between the United States and Iran. Concerns over potential supply disruptions through the Strait of Hormuz, a vital global transit route, fueled the significant price increase across commodity exchanges.

On the Multi Commodity Exchange (MCX), crude futures for July delivery climbed Rs 384, marking a nearly 6 per cent jump to reach Rs 7,198 per barrel. The August contract also advanced, gaining Rs 359 or 5.25 per cent, settling at Rs 7,197 per barrel in a turnover of 4,139 lots.

Escalation Over Strait of Hormuz Sparks Market Frenzy​

The sudden surge in crude prices was directly attributed to the fresh military strikes exchanged between Washington and Tehran over the weekend. Traders noted that these escalations intensified fears surrounding the Strait of Hormuz. This critical waterway is through which nearly a fifth of the world's oil supply passes.

Iran’s actions included an attack on a commercial vessel in the strategic waterway, leading to the subsequent announcement of the Strait's closure by Tehran. The US responded with retaliatory strikes targeting multiple Iranian locations, although Washington maintained that international navigation through the passage remained open.

Global Benchmarks React to Geopolitical Instability​

International oil markets mirrored the tensions seen domestically. On the ICE, Brent crude oil futures for the September contract gained USD 3.59 or 4.72 per cent, trading at USD 79.60 per barrel. Similarly, West Texas Intermediate (WTI) for August delivery rose USD 3.47 or nearly 5 per cent on NYMEX, reaching USD 74.88 per barrel.

The heightened activity was underpinned by reduced tanker movement through the shipping lane and persistent concerns about potential supply shortages.

Analysts Weigh In On Diplomatic Prospects and Supply Tightness​

Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, noted that MCX crude oil futures surged 5 per cent on Monday as escalating US-Iran tensions heightened fears of disruptions in the Strait of Hormuz. She stated that WTI climbed to trade above USD 74 per barrel-mark following the fresh military exchanges between Tehran and Washington.

Yadav also pointed out a weakening prospect for renewed diplomacy. This is due to Iran's demand for progress on both Hormuz transit and oil exports before talks could be resumed. The International Energy Agency has added to market concerns by cautioning that prolonged geopolitical tensions could delay the rebuilding of global oil inventories, increasing fears over supply tightness.