US-Iran war: Oil prices continued their winning streak on Tuesday, 12 May, after US President Donald Trump raised doubts over a ceasefire with Iran by rejecting Tehran’s latest peace proposal, extending the effective shutdown of the crucial Strait of Hormuz.
Brent crude traded near $105 a barrel after gaining 2.9% in the previous session, while West Texas Intermediate hovered near $99.
Back home, crude oil prices on the Multi Commodity Exchange (MCX) also witnessed a similar upward movement. MCX crude oil prices rose nearly a per cent to ₹9,449 per barrel today.
What’s driving crude oil prices today?
Trump, on Monday, said that the ceasefire with Iran was “hanging by a thread,” citing differences over several key demands, including a complete halt to hostilities across all fronts, lifting of the US naval blockade, resumption of Iranian oil exports, and compensation for damages caused by the conflict.
A truce has been in effect since early April and has largely held despite recent flare-ups, including attacks on ships. The near shutdown of the Strait of Hormuz has severely disrupted global supplies of crude oil, natural gas, and fuels, fueling fears of a fresh inflationary shock.
According to a Bloomberg report, Iran responded to Trump’s peace proposal by seeking the removal of the US naval blockade and sanctions relief, while also insisting on retaining some control over traffic passing through the Strait of Hormuz.
The conflict is expected to be a key topic when US President Donald Trump meets Chinese President Xi Jinping this week, with US officials indicating that Trump will raise concerns over China’s stance on Iran, according to the Bloomberg report. Meanwhile, the US Treasury Department on Monday imposed fresh sanctions on additional entities accused of facilitating Iranian oil sales to China, the largest importer of Tehran’s crude.
Crude oil prices outlook
According to Tim Waterer, chief market analyst at KCM Trade, as quoted by Reuters, crude oil prices are likely to hold above $100 until a US-Iran peace deal is finalised.
“As long as the US-Iran negotiations remain inconclusive and physical flows through the Strait of Hormuz stay restricted, we should see prices holding above $100,” Waterer said.
On the technical front, Ponmudi R, CEO of Enrich Money, said that MCX crude oil opened with a sharp gap up and is trading above the ₹9,500 zone, reclaiming key resistance levels on the back of escalating geopolitical tensions.
“A sustained hold above ₹9,600 could extend the rally toward ₹9,800– ₹10,000, with further upside possible should conditions deteriorate further. On the downside, ₹9,200 acts as immediate support; a break below this level could extend losses toward ₹9,000– ₹8,800. The near-term bias has turned bullish, although price action remains highly sensitive to headline-driven developments surrounding the Strait of Hormuz,” he said.
(With inputs from agencies)
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