Crude oil futures experienced a significant rebound of over 3 per cent, driven by escalating military tensions in West Asia that have reignited fears of critical supply disruptions in the global energy market.
Illustration: Dado Ruvic/Reuters
Crude oil futures on the Multi Commodity Exchange (MCX) rebounded over 3 per cent, with August delivery reaching Rs 7,845 per barrel.
The surge is attributed to renewed military escalation in West Asia, specifically Iran’s strikes on American forces and retaliatory actions, which reignited fears of supply disruptions.
International benchmarks also saw significant gains, with Brent oil futures rising nearly 4 per cent to $87.26 per barrel and WTI advancing by almost 4 per cent to $82.17 per barrel.
The rebound follows a 16 per cent slump in the previous three sessions, which was driven by hopes of a permanent agreement to reopen the Strait of Hormuz.
Oil flows through the Strait of Hormuz are down significantly, and Red Sea shipments are weakening due to continued Houthi attacks, indicating ongoing strain in the physical market.
Crude oil futures rebounded more than 3 per cent to Rs 7,845 per barrel on Wednesday, tracking gains in global benchmarks as renewed military escalation in West Asia revived fears of supply disruptions.
On the Multi Commodity Exchange (MCX), crude futures for August delivery increased by Rs 242, or 3.18 per cent, to Rs 7,845 per barrel, snapping a three-session losing streak.
The September contract also rose Rs 200, or 3 per cent, to Rs 7,649 per barrel.
Market Dynamics and Geopolitical Impact
Traders said domestic crude futures tracked a strong recovery in overseas markets.
“MCX Crude oil for August contract was trading with a positive bias at around Rs 7,650, in early trade on Wednesday on renewed supply-disruption concerns,” said Aamir Makda, Commodity & Currency Analyst, Technical Research at Choice Broking.
In the international markets, Brent oil futures for September delivery went up by $3.17, or nearly 4 per cent, to $87.26 per barrel on the Intercontinental Exchange.
The West Texas Intermediate (WTI) for the September contract advanced by $2.91, or nearly 4 per cent, to $82.17 per barrel on the New York Mercantile Exchange.
Escalation in West Asia
Crude oil prices rebounded after Iran launched strikes on American forces in the region, triggering retaliatory action by the US and Saudi military against Tehran-aligned targets in Iraq, said Anindya Banerjee, Head of Commodity and Currency Research at Kotak Neo (formerly Kotak Securities).
The rebound came after crude had slumped 16 per cent in the previous three sessions — the steepest such fall since 2020 — driven by hopes of a permanent agreement that would reopen the Strait of Hormuz, he said.
Analysts said both sides had held fire over the weekend, after nearly two weeks of nightly strikes by the US on Iran, and repeated missile and drone salvoes by Tehran targeting Washington’s allies around the Gulf.
Supply Chain Strain and Outlook
Banerjee said the physical market remains under strain, with oil flows through the Strait of Hormuz down around 80 to 85 per cent from pre-war levels, and Red Sea shipments also beginning to weaken amid continued Houthi attacks.
On the outlook, he said Brent is expected to trade in the $80-100 per barrel range as the geopolitical stalemate persists.