Crude oil prices rise amid escalating US-Iran war, supply fears; Brent above $70 per barrel

US-Iran war: Oil prices edged higher on Monday as renewed military strikes involving the US and Iran revived concerns over potential disruptions to crude supplies from the Middle East.

US benchmark West Texas Intermediate (WTI) crude futures rose 0.71% to $69.72 a barrel, after slipping below the $70 mark on Friday for the first time since February 27, a day before the Iran conflict began. Meanwhile, international benchmark Brent crude gained 0.36% to trade at $72.25 a barrel.

“Crude oil prices are currently trading in the $69–70 per barrel range, remaining well below the highs witnessed during the recent Middle East conflict. Although the latest flare-up in regional tensions triggered a brief bout of volatility in energy markets, crude prices have remained largely contained, providing continued relief to India's macroeconomic outlook,” said Ponmudi R, CEO of Enrich Money.

What's driving crude oil prices today?

The talks to resolve the conflict between the US and Iran have reportedly been put on hold after Washington carried out strikes on Iranian military targets in retaliation for Tehran’s latest attacks on commercial shipping in the Strait of Hormuz.

The escalation followed a series of tit-for-tat attacks over the weekend, with the US targeting Iranian military sites after Tehran struck a vessel near the strategically important waterway. Despite the renewed hostilities, the two sides are expected to hold talks in Doha on Tuesday, according to an Axios report cited by Bloomberg.

The Kiku, the very large crude carrier that was hit while transporting around 2 million barrels of oil, was last tracked off Fujairah, a port in the United Arab Emirates on the Gulf of Oman. The latest flare-up has also slowed oil and natural gas shipments through the Strait of Hormuz, reversing the increase in traffic that had followed the interim understanding between the two sides.

Although shipping traffic through the Strait had picked up and the US Central Command said on Saturday that commercial vessels were continuing to transit the waterway, some tankers abandoned attempts to exit. Shipowners are expected to remain cautious about navigating the strategic chokepoint, with hundreds of vessels still stranded in the Persian Gulf.

Amid heightened tensions over the weekend, a helicopter operated by Saudi Aramco crashed near Ras Tanura, the kingdom’s key energy hub along the Persian Gulf coast. Saudi Arabia’s state news agency was quoted as saying by Bloomberg that the incident but did not disclose the cause of the crash. It also remains unclear whether the accident, which occurred on Sunday, had any impact on energy infrastructure.

Meanwhile, Russian President Vladimir Putin said the country is grappling with fuel supply constraints, including long queues at petrol stations. He added that authorities are considering a complete ban on diesel exports as one of the measures to ease the domestic supply crunch.

(With inputs from agencies)

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