traded more than 5 per cent higher on Monday morning following the US-Israel attacks on Iran over the weekend.
At 9.25 am on Monday, May Brent oil futures were at $77.12, up by 5.83 per cent, and April crude oil futures on WTI (West Texas Intermediate) were at $70.71, up by 5.51 per cent.
March crude oil futures were trading at ₹6483 on during the initial hour of trading on Monday against the previous close of ₹6092, up by 6.42 per cent, and April futures were trading at ₹6483 against the previous close of ₹6106, up by 6.17 per cent.
In their Commodities Feed for Monday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil markets opened significantly stronger on Monday morning, with ICE Brent trading as much as 13 per cent higher initially — trading above $82 a barrel.
“This took the market into the range we had expected following this weekend’s developments. Perhaps more surprising is that the market has given back some of these gains,” they said. There’s still hope that an off-ramp from escalation can be found amid reports that Iran’s security chief is pushing for a resumption of nuclear talks with the US.
Stating that there is still plenty of uncertainty about how the situation in West Asia develops, they said Iranian retaliation and targeting of neighbouring Gulf states are only seeing energy supply risks grow — and leaving the door open for further escalation.
A big concern is the disruption to oil and LNG flows through the Strait of Hormuz. Reports indicate that several ships have been attacked, leaving many shippers reluctant to navigate the strait due to the risks. Clearly, if these disruptions persist, it will leave further upside to prices, they said.
Meanwhile, OPEC+ (Organization of the Petroleum Exporting Countries and allies), which met virtually on Sunday, decided to increase production by 206,000 barrels per day in April.
An OPEC+ statement said that in view of a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories, the eight participating countries decided to resume the unwinding of the 1.65 million barrels per day of additional voluntary adjustments announced in April 2023 and agreed on a production adjustment of 206,000 barrels per day. This adjustment will be implemented in April 2026.
The countries will continue to closely monitor and assess market conditions, and in their continuous efforts to support market stability they reaffirmed the importance of adopting a cautious approach and retaining full flexibility to increase, pause or reverse the phase out of the voluntary production adjustments, including reversing the previously implemented voluntary adjustments of the 2.2 million barrels per day announced in November 2023.
Natural gas
March natural gas futures were trading at ₹266.80 on MCX during the initial hour of trading on Monday against the previous close of ₹262.30, up by 1.72 per cent.
ING Think’s Commodities Feed said the real impact for gas markets will be on European and Asian LNG prices. Around 20 per cent of global LNG supply is at risk, leaving plenty of upside for European gas prices.
“As we near the end of the European heating season, gas storage is below 30 per cent full. This leaves the market tight. Given the potential for disruptions from the Persian Gulf, we could see increased competition between Europe and Asia for alternative supplies. While there’s been a ramp-up in LNG export capacity and more to come, particularly from the US, this would not come soon enough to offset potential losses from the Persian Gulf,” the Commodities Feed said.