US-Iran war: MCX crude oil futures rise 6% amid disruption in the global crude market. Where are they headed?

US-Iran war: Crude oil prices spiked significantly on the Multi Commodity Exchange (MCX) on Monday, March 2, tracking the rise in international oil prices, as the escalating US-Israeli conflict with Iran plunged the global crude market into chaos amid fears of an effective shutdown of the vital Strait of Hormuz.

MCX Crude Oil March futures surged 6% to ₹3,6457 today. Meanwhile, on the international front, Brent crude futures surged as much as 13% to climb above $82 per barrel on Monday — its highest level since January 2025 — before trimming most of its gains.

What's driving crude oil prices today?

According to a Bloomberg report, tanker movement through the strait has mostly come to a standstill, as shipowners and traders voluntarily pause operations amid the escalating conflict. Strait is the critical chokepoint off Iran’s coast that carries about a fifth of global oil supplies and significant volumes of gas.

Iranian officials were quoted as saying on Sunday by Bloomberg that the strategic waterway remained open, and they also confirmed attacks on three oil tankers. Meanwhile, US President Donald Trump stated that American forces had sunk nine Iranian naval vessels and would continue military operations until all objectives were achieved.

In response to the expanding tensions, OPEC agreed at a previously scheduled weekend meeting to increase output quotas next month by 206,000 barrels per day. The alliance — which includes Iran along with Saudi Arabia and Russia — had was expected to proceed with gradual production hikes before hostilities erupted on Saturday.

US and Israel launched extensive military strikes on targets across Iran on Saturday, aiming to weaken Tehran’s leadership and infrastructure. In response, Iran fired missiles toward Israel and US forces in the region. Iranian state media confirmed that Supreme Leader Ayatollah Ali Khamenei, who had led the country for decades, was killed during the attacks. Tehran has declared a period of national mourning and vowed retaliation as tensions escalate sharply in the Middle East.

Where are crude oil prices headed amid the US-Iran war?

According to brokerage firm JM Financial Institutional Securities, Brent has already moved to a seven-month high and scenario analysis suggests that Hormuz disruption could push prices above $90/bbl, while a broader regional conflict could take crude beyond $100/bbl.

The firm further explained that for India, the impact is direct: every $1 rise in crude increases the annual import bill by $2 billion, putting pressure on the trade balance. Markets are likely to move from earnings-driven to oil-driven trading in the near term.

Meanwhile, brokerage firm Emkay Research highlighted that the likely spike in crude prices will hurt macro-financial stability by putting pressure on the currency, current account deficit (USD10/bbl increase in crude = 0.5% CAD/GDP spike), and domestic inflation.

“As the tightness spills over to petchems and commodities, we expect corporate margins to take a hit. Petrol/diesel prices spike ₹0.52/Rs0.55 per litre for USD1/bbl - If prices stay elevated, expect cuts in excise duties (Re1/litre cut = fiscal hit of Rs150bnpa),” the firm said.

(With inputs from Bloomberg)

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.