Synopsis
Oil prices jumped more than 6% on Monday. Tensions flared around the Strait of Hormuz after the United States and Iran exchanged accusations of targeting ships. President Trump says US forces have seized an Iranian cargo ship. Iran responded by refusing to continue peace talks. The conflict has disrupted global oil flows. Experts predict continued price volatility and structurally higher prices.
ETMarkets.comOil prices jumped more than 6% as tensions escalated around the Strait of Hormuz, with the United States and Iran trading accusations of ceasefire violations. Oil price saw a sharp rebound on Monday, up more than 6% after plunging more than 9% in the previous session, as tensions flared again around the Strait of Hormuz. The latest surge follows new accusations from the United States and Iran, each accusing the other of violating the ceasefire by targeting ships over the weekend.
On the geopolitical front, US President Donald Trump said on Sunday that American forces had seized an Iranian cargo ship trying to break its blockade. Iran, in response, said it would not participate in a second round of peace talks, despite Trump’s warning of further airstrikes.
Crude oil prices on April 20
Brent crude futures rose $6.11, or 6.76 percent, to $96.49 a barrel at 11:27 p.m. GMT. West Texas Intermediate United States rose $6.53, or 7.79%, to $90.38 a barrel.
Before the conflict, the strait accounted for about a fifth of the world’s oil supply. The war, which has now lasted almost two months, has seriously disrupted these flows.
Market movements remain highly responsive to developments, with oil prices fluctuating based on changing signals from both sides rather than a marked improvement in supply conditions. The intermittent movement of ships in the strait highlights the deep uncertainty surrounding the world’s most critical energy chokepoint. Even if tensions ease, a complete resumption of oil flows should take several months, experts warn.
On Saturday, Iran tightened its grip on the strait in response to the US blockade, firing on several ships and declaring the route closed. This came just hours after announcing a temporary reopening during a 10-day ceasefire.
What do the experts say?
Brokerage Macquarie said that even if tensions ease, oil prices are likely to remain supported in the $85-$90 range, with a gradual move towards $110 as supply through the Strait of Hormuz improves. He added that if disruptions persist into April, Brent crude could rise as high as $150 a barrel.
Analysts generally believe that crude could enter a phase of structurally higher prices. As the ceasefire is considered temporary, a return to pre-war levels, between $70 and $75, could take several months. In the short term, they expect prices to remain in a range between $80-$85 on the downside and $95-$100 on the upside.
Nuvama Institutional Equities warned that the prolonged closure of the strait, which processes about 20 million barrels per day, could push crude prices into the $110-$150 range.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
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