Global oil markets are once again at the centre of economic turbulence, with Brent crude witnessing a sharp surge on Monday, continuing the consistent rally seen since the outbreak of conflict in West Asia.
Prices have jumped more than 60 per cent, from around $70 per barrel to approximately $112 per barrel on Monday, reflecting the growing strain on global energy supply chains.
The rally has been swift and steep, driven by geopolitical tensions, supply disruptions and mounting uncertainty over critical shipping routes.
A Sharp Rally In Crude Prices
The scale of the surge has been significant even by historical standards. Crude oil has risen about 56 per cent in the past 30 days alone, underscoring how quickly markets have reacted to escalating tensions.
US West Texas Intermediate (WTI) crude traded near $98.75 per barrel on Monday, after gaining over 2 per cent in the previous session, reported IANS.
On the domestic front, crude oil prices for May futures on the Multi-Commodity Exchange (MCX) also reflected the uptrend, rising 0.65 per cent to Rs 9,318 per barrel.
The price spike signals tightening global supply expectations and heightened risk premiums embedded in oil markets.
Strait Of Hormuz: The Critical Flashpoint
At the heart of the current crisis lies the Strait of Hormuz, one of the world’s most important oil transit chokepoints.
Escalating tensions in West Asia have raised fears of disruptions to this vital shipping route, through which a significant portion of global crude oil passes.
The situation intensified after US President Donald Trump issued a 48-hour deadline to Iran to fully reopen the Strait of Hormuz. The deadline is set to expire on Monday, adding to the uncertainty among commodities traders.
Trump had warned that Iran’s power plants would be “obliterated” if the shipping lanes were not reopened.
Iran’s Response Adds To Market Anxiety
Iran has responded with strong rhetoric, threatening to target energy infrastructure in Gulf nations.
At the same time, Iranian authorities have stated that the Strait of Hormuz is not blocked and that navigation continues, albeit under wartime precautions.
This conflicting messaging has kept markets on edge, with traders factoring in the risk of sudden disruptions even if flows continue for now.
Supply Disruptions And Production Cuts
Beyond rhetoric, the conflict has already begun to affect oil production and supply chains.
Production cuts and force majeure declarations have been reported across oil facilities in West Asia, further tightening supply conditions.
According to estimates, crude output losses in the region could rise from 11 million barrels per day currently to a peak of 17 million barrels per day.
Such a scenario would significantly alter global supply dynamics and push prices even higher.
Goldman Sachs: High Prices Likely To Persist
Global financial institutions are factoring in continued volatility in oil markets.
Goldman Sachs has raised its 2026 Brent crude average estimate to $85 per barrel from $77 per barrel. For the near term, the bank expects prices to average around $110 per barrel during the March-April period.
The firm also projects that oil flows through the Strait of Hormuz could remain at just 5 per cent of normal levels for an extended six-week period, followed by a gradual recovery over the next month.
This outlook suggests that supply disruptions may persist longer than initially expected.
Inventories Rise Despite Supply Tightness
Interestingly, even as supply concerns dominate headlines, crude inventories in OECD economies across the US and Europe have continued to build.
This reflects the fact that global oil supply had been exceeding demand before the conflict began, creating a buffer that is now cushioning the immediate impact.
However, if disruptions persist, these inventories could be drawn down quickly, potentially amplifying price volatility.
What It Means For India And Global Markets
For India, the sharp rise in crude prices poses multiple challenges. As a major oil importer, higher prices increase the import bill, put pressure on the rupee, and contribute to inflation.
Rising fuel costs can also have a cascading impact across sectors, from transportation and logistics to manufacturing and consumer goods.
Globally, elevated oil prices tend to influence monetary policy, inflation expectations and investor sentiment. Central banks may be forced to delay rate cuts, while markets remain sensitive to further geopolitical developments.
The Bigger Picture: Volatility Is Here To Stay
The ongoing West Asia conflict has once again demonstrated how closely global energy markets are tied to geopolitics.
While oil prices have surged sharply in response to immediate risks, the future trajectory will depend on how the situation evolves, particularly around the Strait of Hormuz and regional production levels.
For now, one thing is clear: oil markets are likely to remain volatile, and the ripple effects will continue to be felt across currencies, inflation and global financial markets.
