Crude oil prices jumped as much as 3% on Thursday, March 19, after Iran launched attacks on several energy facilities across the Middle East, following a strike on its South Pars gas field, marking a sharp escalation in tensions involving the US and Israel.
Brent crude futures rose $3.69, or 3.44%, to $111.07, while US West Texas Intermediate (WTI) crude gained $2.29, or 2.38%, to $98.61.
Back home, crude oil prices on the Multi Commodity Exchange (MCX) also witnessed a similar upward trend. MCX crude oil prices climbed 1% to ₹9,080 per barrel.
Why are crude oil prices rising?
According to a Reuters report, Qatar Energy said on Wednesday that Iranian missile strikes on Ras Laffan — the hub of Qatar’s key LNG processing facilities — resulted in “extensive damage” to its energy infrastructure. The United Arab Emirates also halted certain energy operations after debris from intercepted missiles triggered incidents at the Habshan gas facilities and the Bab oil field.
Meanwhile, Saudi Arabia reported that it had intercepted and destroyed four ballistic missiles aimed at Riyadh on Wednesday, along with foiling a drone attack targeting a gas facility.
Iran had earlier issued evacuation warnings for multiple oil installations across Saudi Arabia, the UAE, and Qatar ahead of its retaliatory strikes following attacks on its own energy infrastructure in South Pars and Asaluyeh.
South Pars, located in Iran, forms part of the world’s largest natural gas field, which it shares with Qatar across the Gulf.
Donald Trump’s administration is weighing plans to deploy thousands of additional US troops to strengthen its operations in the Middle East, as Washington prepares for the next phase of its campaign against Iran, sources were quoted as saying by Reuters.
Brent Crude near-term outlook
According to Choice Institutional Equities, if the Hormuz situation remains status quo without progress in US–Israel–Iran negotiations, declining floating inventories and tightening marginal storage could drive a sharp increase in oil prices.
The brokerage firm further anticipates crude oil prices to rise up to $130 per barrel in the coming weeks.
However, in a bear-case scenario, the brokerage firm said that if US-Israel intervention leads to renewed negotiations and the reopening of the Strait of Hormuz, Brent prices could retreat towards $80/b over the coming weeks.
This would largely reflect the unwinding of the precautionary demand premium, although a residual geopolitical risk premium may persist, it said.
On the technical outlook of crude oil prices, Kaveri More, Commodity Analyst, Choice Broking, said that gains were partially capped after U.S. crude inventories rose by 6.16 million barrels, marking a fourth straight weekly increase and signalling near-term demand softness.
“Technically, MCX Crude Oil remains in a positive trend, with the April contract trading above 9000. Key support is seen at 8900–8750, while resistance is placed around 9250–9400, where a breakout could extend bullish momentum amid persistent geopolitical risk premiums,” More added.
(With inputs from Reuters)
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
