Global oil prices experienced significant volatility this week, with Brent crude briefly climbing above $126 per barrel on Thursday, marking its highest level since the 2008 global financial crisis. According to CBS News, this represents a four-year high - the last time Brent was priced this high was soon after Russia launched its invasion of Ukraine in early 2022. Brent crude to be delivered in June jumped 3.3% to $121.90 after briefly soaring past $126 per barrel, while Brent to be delivered in July rose 1.4% to $112.02. Benchmark U.S. crude climbed 1.3% to $108.28 per barrel, with the July contract settling higher at $110.88, up 44 cents, or 0.4%. As reported by Reuters, the June contract expired on Thursday, contributing to the price retreat. WTI crude futures hovered above $106, though the July contract settled higher at $110.88, up 44 cents, or 0.4%. As reported by Global Banking & Finance Review, two large sell orders for June Brent traded earlier in the session, with analysts noting 'massive movements, like intraday movements as much as we usually have in months.' The decline reflected 'the market is realizing there might have been a bit of an overreaction yesterday,' as hedge funds sold positions to lock in gains at the end of the month.
The effective closure of the Strait of Hormuz has significantly disrupted global oil and gas shipments, with at least seven ships crossing the waterway in the past 24 hours - a fraction of the 125-140 vessels that travelled daily prior to the war. According to Reuters, three of those ships were dry bulk carriers and one container ship, with two bitumen tankers also leaving. The Strait of Hormuz handles roughly 20-25% of global seaborne oil trade, making this disruption particularly severe for global energy markets. Brent crude has doubled since the U.S.-Israeli attack on Iran began on February 28, while West Texas Intermediate crude is up around 90% due to the supply chokepoint. As reported by Mint, Kranthi Bathini of Wealthmills Securities described crude oil as 'the joker in the pack' for India, warning that rising crude prices could jeopardise India's growth story in the short to medium term. The U.S. has continued its blockade of Iranian ports and vessels, prompting Iran to reinstate severe restrictions on commercial ships using the Strait of Hormuz, with the ensuing gridlock of tankers pushing oil prices higher.
The traditional 'Sell in May and Go Away' strategy faces significant headwinds this year as geopolitical tensions and commodity price volatility create market uncertainty. According to reports from Mint, while this adage often doesn't hold for the Indian stock market, the ongoing US-Iran war, now in its third month, remains a key overhang that could break the historical trend. Data from Trendlyne shows that the Nifty 50 index has risen in six of the last 10 years during May, but this time the index might break away from the trend due to escalating geopolitical tensions. Market experts emphasize that the current environment requires a more nuanced approach than traditional selling strategies, with Harshal Dasani, Business Head at INVasset PMS, stating that the US-Iran conflict and elevated crude prices have raised India's macro risk, but cautioning against panic selling of quality equities. ING Bank strategists Warren Patterson and Ewa Manthey noted that 'the breakdown of talks between the U.S. and Iran, along with President Trump reportedly rejecting Iran's proposal for a reopening of the Strait of Hormuz, has the market losing hope for any quick resumption in oil flows.'
Market experts emphasize that the current environment requires a more nuanced approach than traditional selling strategies. Harshal Dasani, Business Head at INVasset PMS, stated that the US-Iran conflict and elevated crude prices have raised India's macro risk, but cautioned against panic selling of quality equities. According to Mint reports, Dasani expects volatility to remain a key feature of the market amid mixed signals around the US-Iran war, while a decisive end could trigger a sharp rally. Bathini suggested this is a 'buy on dips, sell on rallies' kind of market, emphasizing the need to closely track global developments and stay nimble with positions in the short to medium term. The oil price gains risk a renewed spike in global inflation and higher pump prices in the U.S. ahead of midterm elections, with prospects for any near-term resolution to the Iran conflict or a reopening of the Strait of Hormuz remaining dim. Gas prices continue to surge, with the average price of gas hitting $4.39 a gallon in the U.S. on Friday, up nine cents from Thursday and 34 cents from a week ago and month ago, according to AAA.
Beyond geopolitical factors, Kotak Institutional Equities (KIE) expects some near-term positive momentum if the BJP's projected breakthrough in West Bengal is validated on May 4, 2026. However, as reported by Mint, KIE thinks the durability of any rally will be tested quickly, with the trajectory of crude oil remaining the single largest short-term risk variable. The brokerage expects markets to trade in a range, with attention reverting to earnings delivery, oil price trajectory implications for India's macroeconomic outlook, and the government's willingness to undertake policy adjustments on energy pricing. The UAE's exit from OPEC+ adds uncertainty to long-term oil supply dynamics, complicating the organization's ability to manage oil output and adding to market volatility. President Trump is expected to receive a briefing later in the day on new plans for a potential resumption of military action in Iran from Admiral Brad Cooper, the commander of U.S. Central Command, with options including a wave of 'short and powerful' strikes on Iran, including against infrastructure, according to Axios.
