Synopsis
Oil prices jumped Monday amid escalating tensions in the Middle East, with Brent crude approaching $120 a barrel. Concerns about a possible U.S. ground offensive in Iran, Iran-aligned Houthis attacking Israel and supply disruptions motivated the rally. Analysts warn that prices could reach $200 if the conflict drags on, while $80 could become the norm in the short term.
ETMarkets.comBrent crude approaches $120 amid growing tensions in the Middle East.Oil prices extended their meteoric rise on Monday, with Brent crude futures rising more than 3% to approach the $120 a barrel mark, amid growing expectations that U.S. troops will carry out a ground offensive in Iran, further escalating the war in the oil-rich Middle East.
The US administration led by President Donald Trump is preparing for weeks of ground operations in Iran, the Washington Post reported yesterday. US Central Command said on X that it had deployed 3,500 Marines and sailors to the Middle East aboard the USS Tripoli, marking the largest US military buildup in the region in two decades.
The speaker of the Iranian parliament, for his part, warned that the country’s forces were “expecting American soldiers” and would “rain fire” on any American troops attempting to enter Iranian territory. In his message, reported by Iranian state media, Ghalibaf also said: “The enemy signals the negotiation in public, while in secret it prepares a ground attack.”
Additionally, Yemen’s Houthis launched their first attacks against Israel over the weekend, widening the ongoing war and worsening inflation problems.
These developments have increased fears of a prolonged disruption in oil supplies, thereby spurring higher oil prices. Brent crude futures jumped over 3.4% to trade at $116 per barrel, while West Texas Intermediate (WTI) futures gained over 3% to trade at $103 per barrel, as seen around 8 am IST.
The war, which began earlier this month with U.S.-Israeli strikes killing former Iranian supreme leader Ayatollah Ali Khammenei and leading to massive retaliations from Tehran, has spread across the Middle East. Fears are now growing over a ground offensive and the entry of the Iran-aligned Houthis into Yemen.
Pakistan said it was preparing to hold “meaningful talks” to end the protracted war in the coming days, although Iran said it was ready to respond if the United States launched a ground operation.
What awaits us?
Macquarie has warned that crude prices could reach an unprecedented $200 a barrel if the Iranian conflict extends until the middle of the year and keeps the vital Strait of Hormuz closed. “If the strait were to remain closed for an extended period, prices would be expected to rise high enough to destroy a historically significant amount of global oil demand,” Macquarie analysts said in the March 27 report, as reported by Bloomberg. “The timing of the reopening of the straits and the physical damage to energy infrastructure are the main determinant of the long-term impact on commodities,” he adds.
Ambit Institutional Equities, in its report, said that even if geopolitical tensions ease, oil prices will remain high with $80 being the new normal for Brent due to infrastructure damage, geopolitical risk premia and inventory replenishment.
“While assessments of physical damage to upstream and refining infrastructure remain preliminary, early indications point to significant disruption. Added to this are geopolitical risk premiums that are priced into short-term crude prices. At the same time, demand is amplified by inventory replenishment as importers rush to replenish depleted SPR and OECD stocks. Taken together, these three factors support our view of a sustained increase in crude prices in the short term,” he writes.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
(What’s moving Sensex And Clever Track latest market news, stock market advice, Budget 2025, Equity market on the 2025 budget And expert adviceon AND Markets. Additionally, ETMarkets.com is now on Telegram. For the fastest news alerts on financial markets, investment strategies and stock market alerts, subscribe to our Telegram feeds .)
Subscribe to AND Bonus and read it Electronic document on economic times Online.and Sensex today.
Most trending stocks: SBI share price, Axis Bank share price, HDFC Bank share price, Infosys share price, Wipro stock price, NTPC stock price
…moreless
(You can now subscribe to our ETMarkets WhatsApp Channel)
(What’s moving Sensex And Clever Track latest market news, stock market advice, Budget 2025, Equity market on the 2025 budget And expert adviceon AND Markets. Additionally, ETMarkets.com is now on Telegram. For the fastest news alerts on financial markets, investment strategies and stock market alerts, subscribe to our Telegram feeds .)
Subscribe to AND Bonus and read it Electronic document on economic times Online.and Sensex today.
Most trending stocks: SBI share price, Axis Bank share price, HDFC Bank share price, Infosys share price, Wipro stock price, NTPC stock price
…moreless
