Oil prices rise amid renewed Middle East tensions; Brent climbs above $73 a barrel

Oil prices edged higher on Monday as fresh tensions between the United States and Iran reignited concerns over potential disruptions to crude supplies from the Middle East.

U.S. benchmark West Texas Intermediate (WTI) crude futures rose 1.1% to $70.01 a barrel during Asian trading hours after slipping below the $70 mark on Friday for the first time since February. International benchmark Brent crude gained 0.85% to $73.22 a barrel.

The spike in crude prices came after renewed military exchanges between Washington and Tehran raised concerns over the security of energy shipments through the Middle East. The United States reportedly carried out strikes on Iranian military targets following Tehran's attack on a commercial vessel near the Strait of Hormuz, one of the world's most critical oil transit routes.

However, reports indicating that both countries have agreed to halt further attacks helped ease supply concerns and capped the rise in crude prices.

Meanwhile, petrol and diesel prices remained unchanged across India on Monday. Since the onset of the U.S.-Iran conflict, fuel prices have been raised four times, with the latest increase of ₹2.60 per litre for petrol and ₹2.70 per litre for diesel announced last month. Overall, retail fuel prices have risen by around ₹7.50-8 per litre during the period.

Lower crude may support Indian markets

Brokerage Emkay Global said lower crude prices could emerge as a significant incremental tailwind for Indian equities. The firm noted that the recent correction in oil prices has exceeded its projected range of $75-80 per barrel, with Brent crude falling to around $72 a barrel on June 25.

According to the brokerage, if crude prices remain at current levels throughout FY27, India's current account deficit could narrow to 1.4% of GDP, compared with its base-case estimate of 2.3%.

The brokerage also said the government could derive nearly a 20% fiscal benefit if excise duties on fuel are restored to pre-conflict levels.

"The macro benefits should translate into stronger growth prospects, while the risk of consensus downgrades to FY27 Nifty earnings estimates of ₹1,237 per share, implying 15% year-on-year growth, could diminish significantly," the report said.

Uncertainty persists despite diplomatic efforts

Ponmudi R, Chief Executive Officer of Enrich Money, said crude oil prices are currently trading in the $69-70 per barrel range, remaining well below the highs seen during the recent Middle East conflict.

"Although the latest flare-up in regional tensions triggered a brief bout of volatility in energy markets, crude prices have remained largely contained, providing continued relief to India's macroeconomic outlook," he said.

He added that while both sides have reportedly agreed to halt further attacks following the latest escalation, the developments have reintroduced uncertainty into global financial markets and could keep investor sentiment cautious in the near term.

"Broader diplomatic efforts and peace negotiations remain underway, offering hope that tensions can be contained. Continued progress on the diplomatic front could help limit downside risks and support global risk sentiment in the sessions ahead," he added.

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