Crude futures gain for 4th straight session amid fresh US-Iran strikes

Crude oil futures climbed for the fourth consecutive session on Monday, August 31. As fresh US-Iran military strikes heightened concerns over possible disruption to energy supplies through the Strait of Hormuz, the September contract on the Multi Commodity Exchange (MCX) gaining Rs 232 to Rs 8,216 per barrel.

On the MCX, crude oil for September delivery advanced Rs 232, or 2.91 per cent, to Rs 8,216 per barrel in 6,578 lots.

The October contract rose Rs 100, or 1.27 per cent, to Rs 7,947 per barrel, with 1,749 lots traded.

The gains came after Iran launched retaliatory strikes against US military installations following American attacks on rocket-launcher sites in Iran, raising fears that the conflict could widen, said Akshat Siddhant, lead quant analyst at investment platform Mudrex.

International oil prices also moved sharply higher.

Brent crude futures for November delivery rose USD 2.88, or 3.3 per cent, to USD 90.98 per barrel on the Intercontinental Exchange.

West Texas Intermediate (WTI) crude for October delivery gained USD 2.37, or nearly 3 per cent, to USD 85.77 per barrel on the New York Mercantile Exchange.

The latest escalation over the weekend pushed crude prices more than 3 per cent higher, after Brent had settled at close to USD 89 a barrel on Friday, said Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities.

The US military on Sunday struck two rocket-launcher sites on Iran's Larak Island, marking its first strikes on Iran in a month.

The strikes followed a warning from the US Central Command that Iranian forces had been seen preparing to lay mines in the Strait of Hormuz.

Iran responded within hours by firing missiles at US military bases in the region.

The developments have once again placed the Strait of Hormuz, one of the world's most critical oil chokepoints, at the centre of market concerns.

"Mining the strait has always been this market's single biggest fear, because mines do not distinguish between flags and take months to clear, even the preparation is enough to reprice risk," Banerjee said.

Tanker traffic through the strait has already shown signs of disruption, with visible tanker transits falling to just five vessels a day over the weekend.

Crude oil flows through the area averaged 6.7 million barrels a day last week, sharply below around 20 million barrels a day before the war, Banerjee said.

The Strait of Hormuz is crucial to global oil supplies, making any prolonged disruption a major concern for energy markets.

On the price outlook, Banerjee expects Brent crude to remain in the USD 85-95 per barrel range, though he said the risk has now shifted clearly towards the upper end of that band.