US-Iran war: Oil prices continued their upward trajectory for the third session straight on Tuesday, April 7, after US President Donald Trump escalated threats of destroying key Iranian infrastructure if his demands are not fulfilled by the Tuesday deadline.
Brent crude hovered close to $111 per barrel after gaining 0.7% in the previous session, while West Texas Intermediate traded near $115, marking its highest close since June 2022.
Back home, crude oil prices on the Multi Commodity Exchange (MCX) also followed a similar trend, jumping as much as 2% to 10,786 per barrel.
Why are crude oil prices rising?
Trump has warned that he would rain “hell” on Tehran if it does not meet his 8 p.m. EDT Tuesday deadline to reopen the strait, adding that the country “could be taken out” if no agreement is reached.
In response to a US proposal relayed through Pakistan, Tehran rejected the idea of a ceasefire, insisting instead on a permanent end to the war and resisting calls to reopen the strait.
Iran effectively closed the Strait of Hormuz after US and Israeli strikes began on February 28, disrupting a key route that typically carries around 20% of the world’s oil supply.
The conflict has rattled global crude markets, with spot premiums for US WTI crude climbing to record levels as refiners across Asia and Europe rush to secure alternative supplies amid disrupted Middle Eastern flows.
Further tightening supply concerns, Russia said Ukrainian drones struck the Caspian Pipeline Consortium terminal on the Black Sea—responsible for about 1.5% of global oil supply—damaging loading facilities and storage tanks, according to a Reuters report.
Meanwhile, OPEC+ agreed on Sunday to raise output quotas by 206,000 barrels per day in May, though the increase is expected to be largely symbolic, as key producers are unable to boost exports due to the Strait disruption.
What’s the near-term outlook for crude oil prices?
Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, believes that crude oil remains the clear focal point, with prices extending sharply higher as the conflict broadens across West Asia. With WTI nearing $115 per barrel and Brent approaching $112, markets are increasingly pricing in sustained supply disruption risk, particularly around the Strait of Hormuz, he noted.
Banerjee added that if crude continues to push higher into and beyond this deadline, the impact could extend into adjacent energy chains.
“Disruption to Iran’s petrochemical exports alongside Saudi Arabia’s industrial capacity would tighten global supplies of methanol, urea, and polymers, lifting input costs and adding to inflationary pressure. A sustained oil spike could also briefly tighten dollar liquidity, strengthening the dollar and weighing on financial assets, metals, and bullion—reinforcing crude’s role not just as a high-momentum trade, but as a broader macro driver,” he added.
According to brokerage firm Choice Broking, crude oil prices are expected to remain bullish or highly volatile in the near term.
“As long as the Strait of Hormuz remains disrupted and supply losses persist, prices may stay elevated or test higher levels. Any signs of ceasefire or reopening of the strait could trigger a sharp correction, but until then, supply tightness will continue to support upward momentum,” said the brokerage firm.
(With inputs from agencies)
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