US-Iran war: Crude oil prices climbed more than 2% in early trading on Tuesday, March 17, recovering part of the losses from the previous session, amid concerns over supply disruptions as the Strait of Hormuz remained largely shut and US allies resisted calls to deploy warships to assist tankers through the key route.
Brent futures rose $2.48, or 2.5%, to $102.69 a barrel, while US West Texas Intermediate (WTI) crude advanced $2.42, or 2.6%, to $95.92. In the previous session, Brent had settled 2.8% lower, while WTI crude dropped 5.3% after some vessels managed to pass through the crucial waterway.
Back home, crude oil prices on the Multi Commodity Exchange (MCX) also followed a similar trend. MCX crude oil prices were trading 2.29% higher at ₹8,872 per barrel on Tuesday.
What’s driving crude oil prices today?
Several US allies on Monday pushed back against Donald Trump’s call to deploy warships to escort vessels through the , drawing criticism from the US president, who accused Western partners of lacking appreciation after years of American support.
The Strait of Hormuz — a critical chokepoint handling roughly 20% of global oil and liquefied natural gas flows — has been significantly disrupted by the ongoing US-Israeli conflict with Iran, now in its third week, heightening fears of supply disruptions, elevated energy prices, and rising inflation.
Amid the tensions, Iran has reportedly urged India to release three tankers seized in February as part of negotiations aimed at ensuring safe passage for Indian-flagged or India-bound ships through the Gulf via the strait, according to a Reuters report.
The near-shutdown of the route has also forced the United Arab Emirates — the third-largest producer in the Organisation of the Petroleum Exporting Countries — to curtail production, cutting output by more than half, the report added.
To help ease rising energy costs, the head of the International Energy Agency suggested that member nations could release additional oil supplies, in addition to the 400 million barrels already planned from strategic reserves.
Crude oil prices outlook in the near term
Some banks have revised their longer-term price forecasts upward, reflecting expectations of a potentially extended supply disruption.
Bank of America, as quoted by Reuters, has raised its 2026 Brent crude forecast to $77.50 per barrel from $61, while Standard Chartered increased its projection to $85.50 from $70.
Bank of America noted that its updated outlook is based on two equally probable scenarios: a swift resolution restoring supply flows by April, keeping Brent around $70, or a more prolonged disruption extending into the second quarter, which could push prices closer to $85.
According to Kaynat Chainwala, AVP Commodity Research, Kotak Securities, oil prices are likely to stay volatile and range-bound at elevated levels in the near term.
“Prices briefly pulled back below $97 earlier in the session as traders took note of continued crude exports flowing from Iran’s Kharg Island despite recent U.S. strikes, a signal that immediate supply disruption may be less severe than feared. The dip was short-lived, however, as broader risk sentiment reasserted itself,” Chainwala said.
(With inputs from Reuters)
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