US-Iran war: Oil prices steadied on Monday, 4 May, as traders raised doubts about the feasibility of US President Donald Trump’s proposal for the US to escort neutral vessels through the Strait of Hormuz, especially after reports of a tanker being struck in the key waterway.
Brent crude remained largely unchanged above $108 a barrel, having dropped as much as 2.4% at the open, while West Texas Intermediate hovered near $102.
Back home, crude oil prices on the Multi Commodity Exchange (MCX) also rose marginally. MCX crude oil prices surged as much as 0.44% to ₹9,715 per barrel.
What’s driving crude oil prices?
Oil prices held above $100 per barrel amid no peace agreement and continued disruptions to traffic through the Strait of Hormuz. Talks between the US and Iran carried on over the weekend, with both sides reviewing each other’s responses.
Trump has prioritised securing a nuclear deal with Tehran, while Iran has suggested deferring nuclear discussions until after the war ends and both sides agree to ease blockades affecting Gulf shipping.
Meanwhile, OPEC+ announced on Sunday that it would raise oil output targets by 188,000 barrels per day in June for seven member nations, marking the third straight monthly increase. This hike mirrors the May adjustment, excluding the United Arab Emirates’ share after its exit from OPEC on May 1. However, much of the additional supply is expected to remain notional as long as the ongoing conflict continues to disrupt oil flows through the Strait of Hormuz.
The conflict, which began in late February following US and Israeli strikes on Iran, was framed by Washington as a move to curb Tehran’s potential threat stemming from its nuclear programme. In early March, the US president had stated that naval escorts would be deployed to ensure the safe transit of oil tankers.
Crude oil prices near-term outlook
According to Ponmudi R, CEO of Enrich Money, crude oil traded with heightened volatility through the week but retained a firm undertone, holding near elevated levels as concerns around potential supply disruptions persisted. The market continues to price in risks to global oil flows, limiting meaningful downside and providing support on dips.
On the technical outlook, Ponmudi said that MCX Crude Oil witnessed a volatile week, staging a sharp recovery from lows near ₹8,900 and surging to highs above ₹10,500 before pulling back sharply to trade near the ₹9,600 zone, with extreme swings driven by ongoing developments in the Middle East tensions.
“Immediate resistance stands at ₹9,900– ₹10,100; a sustained move above this zone could revive bullish momentum toward ₹10,300– ₹10,600. Price action has slipped back below the ascending trendline, keeping the near-term structure fragile. On the downside, ₹9,500 acts as immediate support; a decisive break below this level could reinforce bearish momentum and extend losses toward ₹9,200– ₹8,800. The near-term bias remains cautious, with price action contingent on headline-driven developments out of the Strait of Hormuz,” he added.
On the other hand, Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, believes that in the immediate term, three doors are open and only one will swing through. “Iran capitulates, and a deal is struck — barrels return, prices unwind, risk assets rally. Iran refuses to be starved out and strikes first at tankers, infrastructure, or the Strait — the supply hole doubles overnight and crude spikes violently. Or Israel pre-empts unilaterally — Washington’s “buy time” calculus collapses, and the region goes vertical,” he said.
He sees resistance for crude oil prices at $125, and a sustained break opens $135-140, while support sits at $100. “As long as Hormuz remains throttled and the US naval blockade on Iran holds, the war premium stays bid,” Banerjee said.
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