Crude poised for sharp surge amid geopolitical volatility

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Crude oil prices are set to rise further as geopolitical tensions intensify following US airstrikes on Iran’s three key nuclear facilities, accompanied by threats of additional military action if Tehran does not de-escalate with Israel. The heightened crude risk premium is fueling expectations that West Texas Intermediate (WTI) could breach the $100 mark, amid growing speculation that Iran may attempt to block the Strait of Hormuz.

“We are raising our near-term Brent forecast to the $80–$90 range, with $100-plus oil increasingly likely given the elevated risk of Iran closing the Strait of Hormuz,” Bloomberg Intelligence noted in its latest report.

So far in June, crude prices have jumped 24 percent to reach $75 per barrel, extending a 4 percent gain seen in May. The Strait of Hormuz—a critical chokepoint accounting for nearly 20 percent of global oil trade—has emerged as the focal point of supply disruption fears.

Akshay Chinchalkar of Axis Securities said, “Brent has rallied over the past three weeks and is now testing a major trendline drawn from the September 2023 highs near $97. As long as prices remain above $79 and don’t fall below $66.81, we anticipate a breakout above the last swing high of $83. The options market reflects a clear bullish bias, with demand skewed towards upside calls.”

For India—which depends on imports for more than 85 percent of its energy needs—soaring oil prices pose severe macroeconomic challenges. A $10 per barrel rise in crude could widen India’s current account deficit by 0.3 percent of GDP and fuel inflation, thereby compressing real yields.

Analysts caution that if Iran retaliates by disrupting tanker movement through the Strait of Hormuz, oil prices could surge to $120–130 per barrel. This would likely rattle global equity markets and prompt a flight to safe-haven assets. “A cornered Iran may target shipping in the Persian Gulf and the Red Sea through proxies like the Houthis, dramatically escalating the risk environment,” one analyst said, adding that China may be compelled to intervene to maintain stability in oil trade flows.

Despite current volatility, JP Morgan remains measured in its long-term projections. In a June 12 note, the bank reiterated its base-case scenario for Brent crude to average in the low-to-mid $60s in 2025, and around $60 in 2026. However, it acknowledged that in a worst-case scenario involving extended military conflict and closure of the Strait of Hormuz, prices could spike to the $120–130 range.

With markets increasingly reactive to geopolitical headlines, analysts warn that the crude oil outlook is growing more uncertain, leaving little room for complacency.