Crude Prices Soar Amid US-Iran Tensions Over Strait of Hormuz
Crude oil futures rose for the fourth consecutive session on Monday, reaching Rs 8,216 per barrel on the Multi Commodity Exchange (MCX). This surge was fueled by fresh US-Iran military strikes that stoked fears of disruption to energy supplies through the Strait of Hormuz.
Akshat Siddhant, Lead quant analyst at investment platform Mudrex, said Iran's retaliatory strikes rekindled fears of a wider conflict following Washington's attacks on Tehran's rocket-launcher sites. This escalation pushed crude prices over 3% higher after Brent had settled near USD 89 a barrel on Friday.
According to Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, mining the Strait of Hormuz has always been the market's single biggest fear due to the potential for mines to take months to clear. He expects Brent to remain within the USD 85-95 range but warns that the risk has shifted towards the upper end.
The US military's strikes on two rocket-launcher sites on Iran's Larak Island, followed by Iranian missiles fired at American bases in the region, have put the world's most important oil chokepoint back under market participants' attention. The preparation for laying mines into the Strait of Hormuz has re-priced risk, causing crude prices to surge.