Synopsis
Oil prices jumped for the fifth straight day, fueled by escalating tensions in the Middle East. Iran’s actions in the Strait of Hormuz and reports of an air defense commitment have increased concerns. Analysts predict further price hikes if negotiations between the United States and Iran fail, with Brent crude potentially hitting $150 a barrel in the event of supply disruptions.
ETMarkets.comOil prices climb for a fifth day. Tensions in the Middle East are increasing. Iran released images of commandos boarding a ship. Oil price rose slightly on Friday morning, extending its gains for a fifth straight session, amid renewed concerns over escalating tensions in the Middle East. This decision follows Iran’s publication of images of commandos boarding a cargo ship in the Strait of Hormuzas well as reports that its air defense systems had attacked what were described as “hostile targets”.
US President Donald Trump said Iran may have increased its weapons stockpile “a little bit” during the two-week ceasefire, but added that US forces could neutralize it within a day.
Crude oil prices on April 24
Brent crude futures rose $1.23, or 1.17%, to $106.3 a barrel at 0107 GMT, while West Texas Intermediate rose $1.07, or 1.12%, to $96.92. Both benchmarks were already trading more than 3% higher on Thursday, jumping nearly $5 a barrel after reports of air defense activity over Tehran and indications of a power struggle in Iran between hard-liners and moderates.
The standoff increasingly takes the form of competing naval pressures, with the United States and Iran seeking economic leverage to strengthen their negotiating positions.
Iran continues to insist that ships obtain its permission before passing through the strait, while Trump says the United States has “total control” over the waterway. At the same time, the US Navy maintains a blockade targeting Iranian ports and ships.
Separately, Israel’s defense minister said Jerusalem was awaiting approval from the United States to resume military action against Iran and “complete the elimination of the Khamenei dynasty.”
Trump also said in a social media post that Israel and Lebanon had agreed to extend their ceasefire by three weeks following a high-level meeting at the White House.
Where are the prices going?
A note from Haitong Futures cited by Reuters indicates that the ceasefire phase increasingly appears to be an escalation of a new conflict. He adds that if U.S.-Iran negotiations fail to make significant progress by the end of April and hostilities resume, oil prices could reach new highs for the year.
Macquarie estimates that crude prices could remain supported in the $85-$90 range in the near term, with a gradual rise to $110 as supply conditions improve. He also warned that prolonged disruptions into April could push Brent prices up to $150 a barrel.
Nuvama Institutional Equities added that a prolonged closure of the Strait of Hormuz, which carries around 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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