Crude oil prices extended their rally for a third consecutive session on Tuesday, with Brent crude futures trading 0.96% higher at $105.24 per barrel and US West Texas Intermediate rising 1.19% to $99.24 per barrel as of 7:45 am IST, according to Investing.com data. Brent crude oil futures had surged to an intraday high of $105.99 per barrel during Monday's trading session, after opening at $104 per barrel on the escalating tensions in West Asia. US President Donald Trump told reporters at the White House that the monthlong ceasefire between the United States and Iran is on a "massive life support," as reported by CNN. The latest escalation has rattled global commodity markets as investors feared prolonged disruption in the Strait of Hormuz, one of the world's most critical oil transit chokepoints. According to reports from Iranian state media, Tehran's response included several major demands before any ceasefire agreement could move forward, including compensation for war damages, recognition of Iranian sovereignty over the Strait of Hormuz, lifting of sanctions and guarantees against future attacks. In India, crude oil prices on the Multi Commodity Exchange (MCX) also witnessed a similar upward movement, with MCX crude oil prices rising nearly a percent to ₹9,449 per barrel on Tuesday.
Trump strongly criticised Tehran's response to the US proposal, saying "I would call it the weakest right now, after reading that piece of garbage they sent us. I didn't even finish reading it," as reported by Reuters. The latest US proposal had been aimed at restarting talks, but Iran's reply focused on broader regional demands, including an end to hostilities across multiple fronts such as in Lebanon, where Israel continues its conflict with Hezbollah. The escalating tensions have intensified uncertainty over the Middle East conflict and stalled diplomatic engagement, continuing to unsettle global markets. The Wall Street Journal reported that the UAE carried out military strikes inside Iran, including an attack earlier in April on a refinery located on Lavan Island, though the UAE has not publicly confirmed the operation. According to a Bloomberg report, Iran responded to Trump's peace proposal by seeking the removal of the US naval blockade and sanctions relief, while also insisting on retaining some control over traffic passing through the Strait of Hormuz.
The Strait of Hormuz has remained effectively shut amid the ongoing conflict, with shipping traffic through the narrow waterway falling sharply after Tehran warned it could target vessels attempting to cross the corridor. Roughly 20% of global oil and liquefied natural gas shipments pass through the Strait of Hormuz, making it one of the world's most strategically sensitive energy routes. According to the International Energy Agency, about 21 million barrels per day of crude oil, condensates and petroleum products normally move through the Strait of Hormuz. Shipping insurers have sharply increased war-risk premiums for vessels operating in Gulf waters, while several tanker operators have either suspended voyages or rerouted ships around Africa, adding significant costs and delays to global supply chains. Saudi Aramco CEO Amin Nasser warned on Monday that disruptions to shipments through Hormuz could delay the return of stability in oil markets until 2027, potentially affecting around 100 million barrels of oil supply per week. The near shutdown of the Strait of Hormuz has severely disrupted global supplies of crude oil, natural gas, and fuels, fueling fears of a fresh inflationary shock.
Despite disruptions impacting nearly 1 billion barrels of oil supply, crude prices still remain below the highs reached in 2022 after Russia invaded Ukraine. Analysts led by Martijn Rats said the market entered the current crisis with stronger buffers, while investors have largely continued to expect that Hormuz would eventually reopen. However, Morgan Stanley pointed to rising US crude exports and softer Chinese imports as two major reasons why the market has so far avoided a deeper supply shock. The brokerage cautioned that a prolonged closure of Hormuz could tighten global supplies again if the disruption lasts longer than either China or the United States can comfortably manage. Haitong Futures warned that the ceasefire may only be temporary, with the firm adding that stalled negotiations between the US and Iran could trigger another escalation in tensions and push oil prices higher. Nuvama Institutional Equities said an extended shutdown of the Strait of Hormuz could disrupt nearly 20 million barrels per day of crude flows globally, with oil prices potentially climbing to between $110 and $150 per barrel. According to Reuters, Tim Waterer, chief market analyst at KCM Trade, said crude oil prices are likely to hold above $100 until a US-Iran peace deal is finalised, stating that "As long as the US-Iran negotiations remain inconclusive and physical flows through the Strait of Hormuz stay restricted, we should see prices holding above $100."
On the technical front, Ponmudi R, CEO of Enrich Money, said that MCX crude oil opened with a sharp gap up and is trading above the ₹9,500 zone, reclaiming key resistance levels on the back of escalating geopolitical tensions. "A sustained hold above ₹9,600 could extend the rally toward ₹9,800– ₹10,000, with further upside possible should conditions deteriorate further. On the downside, ₹9,200 acts as immediate support; a break below this level could extend losses toward ₹9,000– ₹8,800. The near-term bias has turned bullish, although price action remains highly sensitive to headline-driven developments surrounding the Strait of Hormuz,"** he said. The conflict is expected to be a key topic when US President Donald Trump meets Chinese President Xi Jinping this week, with US officials indicating that Trump will raise concerns over China's stance on Iran, according to the Bloomberg report. Meanwhile, the US Treasury Department on Monday imposed fresh sanctions on additional entities accused of facilitating Iranian oil sales to China, the largest importer of Tehran's crude.
