US-Iran war: Oil prices climbed over 2% in early trade on Monday after Israel directed its forces to advance deeper into Lebanon amid ongoing clashes with the Iran-backed Hezbollah militant group, despite a ceasefire that was declared more than six weeks earlier.
were up $2.37, or 2.71%, at $89.73 per barrel, while Brent crude futures gained $2.16, or 2.37%, to reach $93.28 per barrel.
Back home, crude oil prices on Multi Commodity Exchange (MCX) also witnessed a similar upward movement. MCX crude oil prices rose as much as 3.15% to ₹8,542 per barrel.
What’s driving crude oil prices today?
The escalation, occurring shortly after the US hosted Israel-Lebanon peace negotiations in Washington on Friday, dampened hopes that Washington and Tehran would soon announce an extension of their ceasefire agreement. Those expectations had helped push Brent and WTI crude prices lower by 1.8% and 1.7%, respectively, at Friday’s close.
According to a Reuters report, the Israel-Lebanon conflict has emerged as the most significant regional fallout from the Iran war. The confrontation began on March 2, when Hezbollah launched rockets and drones into Israel in support of its ally, Iran.
Although both sides agreed to a ceasefire in mid-April, exchanges of fire have continued since then.
On Friday, US President Donald said he would soon decide on a proposal to extend the ceasefire with Iran that was first announced in early April. The extension would provide negotiators with additional time to pursue a lasting resolution to the conflict and address disputes surrounding Iran’s nuclear programme. Israel’s participation would be crucial to any agreement, while Iran has repeatedly insisted that Hezbollah must also be part of the discussions.
Crude price outlook
Goldman Sachs believes that weaker-than-expected oil demand from China and Europe presents a significant downside risk to its fourth-quarter forecasts of $90 per barrel for Brent crude and $83 per barrel for WTI, as per a Reuters report. However, potential supply disruptions in the Middle East could still drive oil prices higher, it said.
On the technical outlook, Ponmudi R, CEO of Enrich Money, said that MCX oil closed below the ₹8,300 mark, extending its recent bearish momentum after retreating sharply from the week’s high near ₹9,090 and ending the week with a notable decline.
Ponmudi noted that the correction reflects a significant unwinding of the geopolitical risk premium as markets increasingly price in the possibility of easing tensions in the Middle East and a gradual normalisation of energy supply concerns.
“Technically, immediate resistance is placed in the ₹8,380– ₹8,480 zone. A sustained move above this range could help prices recover towards the ₹8,550– ₹8,700 region.
On the downside, the week’s low near ₹8,200 serves as an important immediate support level, while the broader ₹8,080– ₹8,000 range is likely to coincide with the lower boundary of the long-term ascending trendline structure. A decisive break below this support zone could accelerate downside momentum and expose prices to a deeper correction towards the ₹7,800 level.
From a technical standpoint, the weekly chart has formed a shooting star pattern, signalling rejection at higher levels and highlighting the emergence of selling pressure following the recent rally. Momentum indicators also remain weak, with MACD continuing to reinforce the bearish setup and suggesting the possibility of further near-term weakness,” said Ponmudi.
He further said that the near-term outlook remains cautious and highly headline-driven, with volatility likely to remain elevated as markets continue to monitor developments surrounding the Strait of Hormuz, Middle East diplomacy and broader global energy supply dynamics.
(With inputs from agencies)
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