International crude oil prices spiked by nearly 10% on Monday, surpassing $100 per barrel after the US Navy initiated a blockade at the Strait of Hormuz amidst stalled peace negotiations. Brent crude futures surged by 8.61% to reach an intraday high of $103.40, while US West Texas Intermediate (WTI) crude traded at $105.63, up by 9.38%. On the domestic front, crude oil futures on the Multi Commodity Exchange (MCX) were at Rs 9,850, marking a 7.61% increase.
The sharp increase in oil prices followed an announcement by US President Donald Trump regarding the blockade at the Strait of Hormuz. Trump stated that Iran’s failure to maintain the waterway’s accessibility led to this decision, warning of blocking all ships entering or exiting the Strait due to concerns over maritime security and potential disruptions in global oil supplies. Despite a recent two-week ceasefire agreement between the US and Iran on April 8 to ease tensions and reopen the Strait, the latest events suggest a breakdown in diplomatic efforts, raising worries about supply interruptions.
The Strait of Hormuz serves as a crucial passage for global crude oil shipments, and any disturbances in this route have immediate impacts on supply chains and pricing. Concurrently, domestic stock markets experienced a decline, with benchmark indices Sensex and Nifty dropping around 2% in early trading due to escalating global risk aversion. In Asian markets, major indices such as the Nikkei, the Hang Seng, and the KOSPI also saw declines of over 1%.
