Why Brent crude could hit $120 amid Iran war? What it means for India as analysts warn oil prices to remain volatile

Crude oil prices are expected to remain volatile amid stalled US-Iran talks, Hormuz risks and rising tensions in West Asia. Analysts warn Brent crude could hit $120 per barrel if supply disruptions worsen. For India, higher oil prices could raise import costs, fuel prices and inflation.

Crude oil prices are likely to remain volatile in the coming week as stalled US-Iran negotiations, escalating tensions in West Asia and persistent supply risks keep global energy markets on edge, according to analysts cited by news agency PTI.

While measures to ease supply shortages could offer temporary relief, uncertainty over the reopening of the Strait of Hormuz and the threat of further attacks on energy infrastructure continue to underpin prices.

Monthly oil market reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) will also be in focus.

Crude oil prices: Brent nears $110, WTI gains nearly 9%

Crude oil futures rose sharply over the past week as concerns over supply disruptions and geopolitical tensions outweighed hopes of an improvement in global availability.

On the Multi Commodity Exchange (MCX), crude oil futures for November delivery climbed ₹566, or 6.4%, over the week to close at ₹9,394 per barrel.

In international markets, Brent crude futures for December delivery rose $5.14, or nearly 5%, to settle at $109.86 per barrel, touching the $110 mark on Friday.

Ajit Mishra, senior vice-president of research at Religare Broking, told PTI that the outlook remained cautiously bullish, with prices likely to respond more to geopolitical developments and actual supply disruptions than to headlines alone.

Recent declines in US crude inventories have added to the upward pressure. Mishra said a further escalation in geopolitical risks could push Brent crude towards $115-120 per barrel.

Strait of Hormuz remains a key supply risk

The Strait of Hormuz remains a major source of uncertainty for oil markets. Any disruption to shipments through the strategic waterway could further tighten global supplies and drive prices higher.

Iranian Foreign Minister Abbas Araqchi said on Sunday that Tehran's proposal to reopen the strait within seven days remained on the table, according to Iranian media reports.

Iran submitted the proposal in mid-September after an interim ceasefire collapsed. Tehran later acknowledged receiving a US response, but negotiations have stalled. Iran's security chief said last week that Washington had failed to address all seven conditions for reopening the waterway.

The lack of progress has left markets weighing the possibility of a diplomatic breakthrough against the risk of further escalation and disruption to one of the world's most important oil transit routes.

Why crude prices remain firm despite supply relief measures

Navneet Damani, head of research for commodities at Motilal Oswal Financial Services, told PTI that crude oil's muted response to bearish developments suggested that physical supply constraints were increasingly outweighing optimism over policy measures.

Releases from G7 strategic stockpiles, a US-Russia diesel arrangement and plans to ease sanctions on Moscow's shadow fleet had raised expectations of improved availability. However, these measures have failed to trigger a sustained decline in prices.

Logistical bottlenecks and an uneven recovery in supply continue to constrain crude availability.

The increase in West Asian exports in September was largely driven by Saudi Arabia, while vessel attacks, Houthi threats and limited capacity on alternative routes have left regional shipments vulnerable to further disruption.

Damani also cited stalled US-Iran negotiations, delayed Chinese crude arrivals and an estimated drawdown of 8 million barrels in US inventories as factors adding to supply concerns.

The IEA's warning of prolonged tightness in diesel supplies has added to concerns over the availability of refined petroleum products. Both the IEA and the US Energy Information Administration have projected a broader recovery in supplies only in 2027, subject to higher production and secure export routes.

US President Donald Trump has said Washington was considering joining Saudi strikes against Iran-backed Houthi rebels in neighbouring Yemen following an attack on Riyadh's international airport.

Any expansion of hostilities could increase the risk of attacks on commercial shipping and energy infrastructure, complicating efforts to restore stable oil flows.

Mishra said further escalation or damage to energy facilities in West Asia could push crude prices higher by increasing the geopolitical risk premium.

Will Russian oil offer relief to India?

An executive order by Trump waiving key sanctions, restrictions and tariffs relating to Russia and Iran has offered temporary relief to major buyers of Russian oil, including India, amid rising energy prices.

However, the measures do not eliminate the risk of supply disruptions. Attacks on Russian energy infrastructure could still affect production and exports, leaving crude markets exposed to developments involving both Russia and West Asia.

For India, one of the world's major crude oil importers, a sustained rise in prices could increase the cost of energy imports and add pressure on domestic fuel prices and inflation.

Analysts said the market's direction would depend largely on whether geopolitical tensions translate into actual disruptions to production and shipments.