Brent crosses $80: Why crude oil prices are rallying amid US-Iran tensions

Crude oil prices jumped more than 5 per cent on Wednesday, with Brent crude briefly crossing the $80-a-barrel mark, after US President Donald Trump threatened fresh military strikes against Iran, reigniting concerns over supply disruptions through the Strait of Hormuz. The rally has renewed worries over inflation and raised the possibility of fresh pressure on global equity markets if crude sustains above the $80 level.

At around 12:15 am IST, Brent crude futures were trading at $78.22 a barrel, up $4.06 or 5.47 per cent, after hitting an intraday high of $80.59. US West Texas Intermediate (WTI) crude rose $3.31, or 4.70 per cent, to $73.75 a barrel.

The sharp rally puts Brent on track for its highest close since June 19 and WTI for its strongest settlement since June 18. It also marks the biggest single-day percentage gain for both crude benchmarks since April.

Why are crude oil prices rising?

Oil prices rallied after Trump said an interim agreement aimed at ending the conflict with Iran was "over" and indicated that the United States was likely to launch fresh strikes on Wednesday night following Iranian attacks on US military bases in the Gulf.

The escalation follows US military operations targeting more than 80 locations across Iran in response to attacks on three commercial vessels transiting the Strait of Hormuz. According to US Central Command (CENTCOM), the strikes targeted Iranian air defence systems, command-and-control networks, coastal radar sites, anti-ship missile capabilities and more than 60 Islamic Revolutionary Guard Corps (IRGC) boats operating in and around the strategic waterway.

Adding to supply concerns, the US also revoked temporary sanctions relief that had allowed Iranian crude exports, tightening pressure on global oil supplies.

Iran-US conflict raises supply disruption fears

Iran said on Wednesday that it had targeted US military sites in Bahrain and Kuwait after US forces struck Iranian targets in retaliation for attacks on tankers in the Strait of Hormuz.

The latest exchange has further weakened an already fragile ceasefire and reduced hopes of a lasting peace agreement, increasing uncertainty over energy supplies from the Middle East.

Why is the Strait of Hormuz important?

The Strait of Hormuz is one of the most important energy transit points in the world, connecting the Persian Gulf to global markets. Around 20 million barrels of crude oil and petroleum products pass through the waterway every day.

The strait accounts for nearly 25 per cent of global seaborne oil trade and about 20 per cent of global petroleum liquids consumption. Before the latest conflict, nearly one-fifth of the world's oil supply moved through the Strait of Hormuz.

Any disruption to shipping through the route can quickly tighten global supplies and push up crude prices, as traders factor in the risk of shortages.

Brent above $80 could weigh on stock markets: Anil Singhvi

Earlier in the day, Zee Business Managing Editor Anil Singhvi had identified rising crude oil prices as a key risk for equity markets.

Singhvi said crude had established strong technical support in the $70-$72 per barrel range and had already started showing signs of a rebound even before the latest geopolitical escalation.

He added that the US decision to tighten restrictions on Iranian oil exports has further strengthened bullish momentum in crude. According to Singhvi, if Brent crude sustains above the $78-$80 per barrel range, it could emerge as a major trigger for fresh selling pressure in equity markets, including India, as higher oil prices could stoke inflationary concerns and increase input costs for businesses.