Although the ceasefire technically remains in place, markets have already reverted to pre-ceasefire dynamics, as reflected in the sharp rebound in oil prices. Notably, prices had tumbled by as much as 15% in a single day just after the ceasefire was announced.
U.S. President Donald Trump said on Sunday that the Navy would begin a blockade of the Strait, escalating tensions after marathon negotiations with Iran failed to produce a deal. The breakdown has put a fragile two-week ceasefire at risk. Trump also acknowledged that oil and gasoline prices could stay elevated through the November midterm elections.
Iran’s Revolutionary Guards responded by warning that any military vessels approaching the Strait would be treated as a violation of the ceasefire and dealt with firmly.
Last month, international brokerage firm UBS downgraded the three counters following mounting uncertainty over rising crude oil prices amid US, Israel-Iran war. The international brokerage revised target prices to Rs 175 for IOCL from Rs 190, Rs 365 for BPCL from Rs 425, and Rs 340 for HPCL from Rs 540.
What’s next for prices?
Brokerage firm Macquarie noted that even if tensions ease, oil prices are likely to stay supported in the $85 to $90 range, with a gradual move towards $110 as flows through the Strait of Hormuz normalise. It added that if disruptions extend through April, Brent could still rise to $150 per barrel.
Looking ahead, crude prices could move higher from current levels. According to Kayanat Chainwala of Kotak Securities, oil may rise to $120 per barrel in the near term and potentially touch $150 if the conflict continues.
Nuvama Institutional Equities echoes the same view. The continued closure of the Strait of Hormuz, which handles around 20 million barrels per day, could push crude prices to the $110–150 per barrel range.
Market experts believe crude may be entering a structurally higher price phase. Ajit Mishra, Senior Vice President at Religare Broking, said the current ceasefire is temporary and a return to pre-war levels of $70 to $75 could take several months. In the near term, he expects crude to remain within a range of $80 to $85 on the downside and $95 to $100 on the upside.
Analysts also point out that as long as tensions persist, the outlook for crude remains volatile with an upward bias. Continued disruptions in the Middle East, particularly around the Strait of Hormuz, are likely to keep supply tight, supporting both Brent and WTI prices and maintaining inflationary pressures globally.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)