Why Brent crude could hit $120 amid Iran war? What it means for India as analysts warn oil prices to remain volatile

Crude oil prices are likely to remain volatile in the coming week as stalled US-Iran negotiations, escalating tensions in West Asia and persistent supply risks keep global energy markets on edge, according to analysts cited by news agency PTI.

While measures to ease supply shortages could offer temporary relief, uncertainty over the reopening of the Strait of Hormuz and the threat of further attacks on energy infrastructure continue to underpin prices.

Monthly oil market reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) will also be in focus.

Crude oil prices: Brent nears $110, WTI gains nearly 9%

Crude oil futures rose sharply over the past week as concerns over supply disruptions and geopolitical tensions outweighed hopes of an improvement in global availability.

On the Multi Commodity Exchange (MCX), crude oil futures for November delivery climbed ₹566, or 6.4%, over the week to close at ₹9,394 per barrel.

In international markets, Brent crude futures for December delivery rose $5.14, or nearly 5%, to settle at $109.86 per barrel, touching the $110 mark on Friday.

Ajit Mishra, senior vice-president of research at Religare Broking, told PTI that the outlook remained cautiously bullish, with prices likely to respond more to geopolitical developments and actual supply disruptions than to headlines alone.

Recent declines in US crude inventories have added to the upward pressure. Mishra said a further escalation in geopolitical risks could push Brent crude towards $115-120 per barrel.

Strait of Hormuz remains a key supply risk

The Strait of Hormuz remains a major source of uncertainty for oil markets. Any disruption to shipments through the strategic waterway could further tighten global supplies and drive prices higher.

Iranian Foreign Minister Abbas Araqchi said on Sunday that Tehran's proposal to reopen the strait within seven days remained on the table, according to Iranian media reports.

Iran submitted the proposal in mid-September after an interim ceasefire collapsed. Tehran later acknowledged receiving a US response, but negotiations have stalled. Iran's security chief said last week that Washington had failed to address all seven conditions for reopening the waterway.

The lack of progress has left markets weighing the possibility of a diplomatic breakthrough against the risk of further escalation and disruption to one of the world's most important oil transit routes.

Why crude prices remain firm despite supply relief measures

Navneet Damani, head of research for commodities at Motilal Oswal Financial Services, told PTI that crude oil's muted response to bearish developments suggested that physical supply constraints were increasingly outweighing optimism over policy measures.

Releases from G7 strategic stockpiles, a US-Russia diesel arrangement and plans to ease sanctions on Moscow's shadow fleet had raised expectations of improved availability. However, these measures have failed to trigger a sustained decline in prices.

Logistical bottlenecks and an uneven recovery in supply continue to constrain crude availability.

The increase in West Asian exports in September was largely driven by Saudi Arabia, while vessel attacks, Houthi threats and limited capacity on alternative routes have left regional shipments vulnerable to further disruption.

Damani also cited stalled US-Iran negotiations, delayed Chinese crude arrivals and an estimated drawdown of 8 million barrels in US inventories as factors adding to supply concerns.

The IEA's warning of prolonged tightness in diesel supplies has added to concerns over the availability of refined petroleum products. Both the IEA and the US Energy Information Administration have projected a broader recovery in supplies only in 2027, subject to higher production and secure export routes.

US-Iran tensions and Houthi threats add to uncertainty

The geopolitical outlook remains fluid amid concerns that the conflict in West Asia could widen further.

US President Donald Trump has said Washington was considering joining Saudi strikes against Iran-backed Houthi rebels in neighbouring Yemen following an attack on Riyadh's international airport.

Any expansion of hostilities could increase the risk of attacks on commercial shipping and energy infrastructure, complicating efforts to restore stable oil flows.

Mishra said further escalation or damage to energy facilities in West Asia could push crude prices higher by increasing the geopolitical risk premium.

Will Russian oil offer relief to India?

An executive order by Trump waiving key sanctions, restrictions and tariffs relating to Russia and Iran has offered temporary relief to major buyers of Russian oil, including India, amid rising energy prices.

However, the measures do not eliminate the risk of supply disruptions. Attacks on Russian energy infrastructure could still affect production and exports, leaving crude markets exposed to developments involving both Russia and West Asia.

For India, one of the world's major crude oil importers, a sustained rise in prices could increase the cost of energy imports and add pressure on domestic fuel prices and inflation.

Analysts said the market's direction would depend largely on whether geopolitical tensions translate into actual disruptions to production and shipments.

About the Author

Bhanu Pratap is a journalist who reports and writes on foreign affairs, India’s foreign policy, geopolitics and strategic affairs. He closely follows diplomatic developments in New Delhi and has a keen interest in defence and national security.<br> <br> Bhanu also focuses on in-depth, interview-based reports and regularly speaking with experts and policymakers to bring perspectives and context to major developments around the world.<br> <br> He is also interested in stories with strong humanitarian angles.<br><br> One such report examined the cases of Indian nationals who were allegedly recruited and forced into Russia’s war against Ukraine. While reporting the story, Bhanu spoke to the families of those affected and documented their experiences. The report was later taken into account by the United Nations in its findings on human rights violations linked to the war in Ukraine.<br> <br> For Bhanu, the zeal to produce meaningful and impactful journalism remains at the heart of his work.<br> <br>He has previously worked with Firstpost, NDTV, Newslaundry and Republic.<br><br> Bhanu studied at the Delhi School of Journalism, University of Delhi. He initially chose science with plans to pursue engineering, influenced by conventional expectations, but fate had other plans and eventually led him to journalism.<br><br> Beyond the newsroom, Bhanu enjoys exploring culture and history and often spends his days off on heritage walks. He is also passionate about travelling, biking and listening to folk music.<br> <br>For tips, reviews and suggestions, you can reach him at bhanu.pratap@htdigital.in.