50% return in a week! After gold and silver, Should you invest in crude oil on MCX? Experts weigh in

Crude oil prices surged past USD 119 a barrel on Monday, levels not seen since mid-2022, after supply cuts by major producers and fears of prolonged shipping disruptions in the Strait of Hormuz amid the escalating US–Israel conflict with Iran.

Brent crude touched USD 119.50 a barrel, while WTI rose to USD 119.48. The gains followed a week of sharp rises, with Brent up 28 per cent and WTI 36 per cent. The Strait of Hormuz, through which around one-fifth of global oil and liquefied natural gas passes, remains largely closed.

Analysts say the appointment of Mojtaba Khamenei as Iran’s supreme leader signals continued hardline policies, adding to geopolitical concerns.

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Contrasting Trends in Crude, Gold, and Silver

Crude oil, gold, and silver have shown contrasting trends over recent periods. MCX March crude oil futures surged 13.22 per cent in a day, 50.51 per cent in a week, and 79.73 per cent in three months.

Gold April futures fell 0.91 per cent in a day and 3.08 per cent in a week, but rose 2.65 per cent in a month and 21.22 per cent in three months.

Silver May futures dropped 1.97 per cent in a day and 9.98 per cent in a week, though they gained 42.30 per cent over three months. Experts note that while silver has led quarterly gains, crude oil outperformed metals in short-term returns.

Expert Views on Current Crude Rally

“Crude oil prices surged due to conflict in West Asia and the closure of the Strait of Hormuz, which carries roughly 20 per cent of global crude supply,” said Manoj Kumar Jain.

“WTI prices hit USD 119.43 a barrel, and Brent reached USD 119.46. On MCX, March futures traded near Rs 10,549 per barrel, moving around Rs 9,500 during the day. This rise is driven by war and supply concerns, and prices may not sustain at these levels for long. If the conflict eases, crude could fall to around USD 80. At current levels, investment in crude is risky, and short selling is not advisable. Options trading may be considered to manage volatility.”

Sugandha Sachdeva, founder of SS WealthStreet, said, “The sharp rally this week is linked to the Iran–US conflict entering its seventh day. The near shutdown of shipping traffic through the Strait of Hormuz has created a potential supply shock. Tankers face operational uncertainty, rising insurance costs, and delays, leaving significant crude and refined fuel volumes stranded. Any prolonged disruption could tighten global supply and push prices further.”

Supply Disruptions and Price Outlook

According to industry estimates, nearly 15 million barrels per day of crude oil production and 4.5 million barrels per day of refined fuels are affected by disruptions around the Strait of Hormuz.

Sachdeva adds that if the conflict persists, it could trigger acute shortages and sharply higher prices. Technical analysis shows Brent has broken out of a long-term downtrend, indicating strong bullish momentum. Short-term resistance is near USD 96, with further gains possible if tensions escalate. Prices could potentially rise to USD 135–USD 150, nearing the historic highs of 2008.

Implications for India

For India, the situation has significant implications. The country is the third-largest crude importer, with nearly 46–50 per cent of imports passing through the Strait of Hormuz. Higher crude prices would increase costs for industries such as petrochemicals, fertilisers, aviation fuel, tyres, and paints.

Rising prices could feed into consumer inflation. Natural gas flows are also disrupted, affecting sectors reliant on LNG. Additionally, rising geopolitical uncertainty may pressure the Indian rupee, which could worsen imported inflation.

However, mitigating factors exist. OPEC+ has signalled a potential increase in output to balance supply disruptions. Russia has offered a discounted crude supply to India. The global energy mix is now more diversified, with increasing renewable energy use. India is also strengthening energy security through strategic reserves and diversified sourcing agreements.

Investor Caution and Trading Strategies

Experts say investors can consider MCX crude oil trading amid volatility but must remain cautious. “Short-term prices could range between USD 80 and USD 120 per barrel. Breakouts or breakdowns could open new ranges. Options trading is suitable to minimise risks in the current uncertain environment,” Jain said.

While gold and silver remain popular for safe-haven investments, analysts suggest crude oil could attract speculative interest given geopolitical tensions. However, they caution that gains are likely to be volatile, and prices may correct sharply if supply fears ease. Investors should carefully weigh risk and reward before entering positions at current levels.