Brent Crude Above $106 as Hormuz Tensions Cloud Global Supply Outlook

Brent crude has surged past the $106 per barrel mark, underscoring a sharp risk premium returning to global energy markets as geopolitical tensions intensify in West Asia. Brent Crude has gained 19% over the past week, while WTI Crude has climbed about 17%.
 
The Indian crude basket averaged $114.77 a barrel in April, up from $69.01 a barrel in February. 

The primary trigger is the escalating US–Iran conflict, particularly disruptions around the Strait of Hormuz, a critical artery for nearly one-fifth of global oil flows. Despite a ceasefire announcement by US President Donald Trump, tensions remain elevated. The US naval blockade, minesweeping operations, and warnings of military escalation have effectively choked traffic through the strait. While some vessels continue to pass, the uncertainty around supply routes has sharply lifted prices. Iran’s assertive posture, including boarding of cargo ships, has further amplified fears of prolonged disruption.

The spike is not just about supply disruption but also about expectations. Markets are pricing in a sustained geopolitical risk
premium, with traders factoring in the possibility of tighter supply, higher freight costs, and insurance premiums. For import-dependent economies like India, elevated crude prices directly translate into inflationary pressures, fiscal strain, and potential currency volatility.

The outlook remains binary. A credible diplomatic breakthrough--such as reopening of the Strait of Hormuz or progress in US–Iran talks--could quickly ease prices back below $100. However, continued brinkmanship or military escalation could push Brent toward $110–115 levels in the near term.

For now, oil markets are likely to remain volatile, with prices driven less by fundamentals and more by geopolitical headlines, keeping both policymakers and investors on edge.