Crude oil futures rise following US military action in the Strait of Hormuz

Crude oil futures traded higher on Monday morning following a US military attack on an Iranian island located in the Strait of Hormuz. The incident has raised concerns over potential disruptions to energy flows from the Persian Gulf.

At 9:33 am on Monday, December Brent oil futures were recorded at $90.18, marking an increase of 4.71 per cent. Simultaneously, October crude oil futures on West Texas Intermediate (WTI) stood at $85.09, up by 2.03 per cent.

Domestic markets reflected a similar trend during the initial hours of trading on the Multi Commodity Exchange (MCX). September crude oil futures traded at ₹8,125, registering a 1.77 per cent increase against the previous close of ₹7,984. October futures traded at ₹7,984, up 1.75 per cent from the previous close of ₹7,847.

The market movement follows a statement posted on X by the US Central Command, which stated that its forces took limited and precise action against Islamic Revolutionary Guard Corps (IRGC) minelaying forces that posed an imminent threat in the Strait of Hormuz. The US military stated that the action was taken to protect civilian mariners, commercial shipping, and ensure the free flow of global commerce.

In contrast, the Islamic Revolutionary Guard Corps of Iran characterized the US strikes as an act of aggression intended to prevent the IRGC from placing mines in the vital waterway.

Analysts from ING Think, including Head of Commodities Strategy Warren Patterson and Commodities Strategist Ewa Manthey, noted in their commodities feed that oil prices began the week stronger following the first military strikes between the US and Iran in a month.

According to the ING Think analysts, the US struck Iranian launchers over the weekend amid indications that Iran was preparing to launch mines into the Strait of Hormuz. In retaliation, Iran reportedly launched missiles toward a US base in Jordan, which were intercepted. Analysts warn that these events reinforce concerns about a prolonged stalemate between the two nations and potential disruptions to energy supplies from the Persian Gulf.

Market observers highlight that the key factor moving forward will be whether this exchange triggers further rounds of military strikes and whether commercial shippers become hesitant to navigate the Strait of Hormuz, a key maritime chokepoint for regional oil producers.

"Geopolitical tensions in critical trade corridors like the Strait of Hormuz have an immediate and direct impact on global commodity markets. For businesses and startups dependent on supply chains, logistics, and energy inputs, sudden volatility in crude oil prices serves as a reminder to maintain robust risk management frameworks. Monitoring energy price fluctuations remains crucial for operational budgeting and cost planning during periods of international uncertainty." — Dr. Shishir Gupta, Founder & CEO, StartupLanes