Oil Prices Rise as US-Iran Tensions Grow

Brent Crude Prices Jump

Brent Crude prices went up by 5% on Monday. This happened after US airstrikes targeted Iran’s key nuclear sites on Sunday. The action ended doubts about US involvement in the Israel-Iran conflict.

Prices Rise Then Fall

Prices shot up at first but then dropped. Attacks on Fordow, Natanz, and Isfahan had led to hopes of a lasting oil rally. Iran is a big oil producer. It makes up about a third of the world’s oil output.

Market Responses

Last week, Brent Crude futures went up by 11%. They reached $80 per barrel before falling back. Prices bounced back as Trump kept markets guessing. But hopes of a ceasefire and plenty of supply from OPEC+ limited further gains.

Experts Share Their Views

Experts say demand is still weak. This gives little reason for oil to stay at high levels. OPEC+ will meet on July 5. They will talk about another output increase for August.

Chance for Higher Prices

Saul Kavonic, an energy expert, said, “Much depends on Iran’s response. This could push us toward $100 oil if Iran reacts as they have threatened.”

Iran’s Reaction and Global Effect

Iran says it has the right to respond to the US attacks. Local news reports that Iran’s leaders have approved closing the Strait of Hormuz. The US has asked China to stop Iran from taking that step.

The Strait of Hormuz

The Strait of Hormuz is a vital oil route. Over 20 million barrels per day passed through it last year. This is about 20% of the world’s oil supply.

Economic Warnings

Goldman Sachs has warned that closing the strait could push oil prices above $100 per barrel. JPMorgan thinks this is unlikely. They say such a move could be seen as an “act of war” by the US.

Effect on India’s Economy

Rising oil prices could harm India’s economy. This includes oil companies like HPCL, BPCL, and Indian Oil. Industries like aviation, paints, and tires could also be hit.

Expert Thoughts

Goldman Sachs’ Santanu Sengupta told CNBC-TV18 that a rise in oil to $75 per barrel would hurt India’s economic stability. A $10 increase could raise costs by 30–40 basis points.

Samiran Chakraborty, chief India economist at Citi, noted that supply chain problems could raise inflation risks. He said India might still handle slightly higher prices due to its limited exposure to Iranian oil.

Future Outlook

US officials said no further strikes are planned for now. They warned that any retaliation from Iran would invite a stronger response.

John Kilduff of Again Capital said, “This is the big one. The market expects higher prices from this. How high depends on Iran’s response.”