Oil Price Today (July 15): Crude oil above $86/bbl as US-Iran exchange fresh strikes. Bigger surge brewing?

Oil prices climbed further on Wednesday after U.S. President Donald Trump announced a naval blockade on all Iranian ports and Iran responded with fresh strikes targeting U.S. infrastructure in the region.

Crude oil price on July 15

Brent crude settled at its highest level since June 12 for a second consecutive session, while West Texas Intermediate (WTI) closed at its strongest level since June 15. The rally extended into early Wednesday trade, with Brent rising $1.46, or 1.72%, to $86.19 a barrel while WTI gained $1.11, or 1.4%, to $80.40 a barrel.

On Tuesday, both benchmarks had surged around 2% to their highest levels in a month as the conflict further disrupted supplies moving through the Strait of Hormuz.

Also read: A dangerous new phase of war? Iran's military is being hit 'very hard', says Donald Trump


The U.S. military said early Wednesday that it had launched another round of strikes aimed at degrading Iranian capabilities used to attack commercial shipping in the Strait of Hormuz. Tehran, meanwhile, maintained that it had once again shut the strait after fighting with the U.S. resumed last week, undermining the already fragile truce reached in June following months of conflict.

"I'll save the energy targets for last, but ultimately we'll hit energy targets," Trump said in an interview with Fox News aired on Tuesday night during "Special Report with Bret Baier".

Iran's army said it launched drone attacks on U.S. positions at Jordan's Azraq base early Wednesday, though the Pentagon had not immediately commented on the claim. Separately, Iran's Islamic Revolutionary Guard Corps said it had targeted weapons and storage facilities in Bahrain and Kuwait. Reuters could not immediately verify those reports.

The latest escalation has also cast fresh doubt over whether the memorandum of understanding signed last month can pave the way for a lasting end to the conflict, which has spread across Iran's neighbouring region.

Read more: Oil's war premium makes a comeback with missiles

What are experts saying?

Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities told ETMarkets that the market is reacting less to the military action itself and more to the collapse in diplomatic momentum. He noted that Tehran has attached fresh conditions for restarting negotiations, with every new exchange pushing back the restoration of normal tanker traffic through the Strait of Hormuz, which had already been operating well below pre-war levels before the latest escalation.

Banerjee said the renewed uncertainty has rebuilt the geopolitical risk premium, with Brent crude now testing the upper end of Kotak Securities' base-case range of $70 to $80 per barrel. If the conflict continues and shipping disruptions worsen, prices could rise to $85-$90 per barrel.

He, however, maintained that the base-case scenario remains a contained conflict rather than a complete closure of the Strait of Hormuz. Banerjee said Washington continues to prefer lower oil prices ahead of the midterm elections, Tehran is still seeking sanctions relief, and mediation efforts led by Qatar remain underway. Even so, he said the outlook for crude remains skewed to the upside as long as uncertainty over oil shipments persists.

Nuvama Institutional Equities warned that an extended closure of the Strait of Hormuz could disrupt nearly 20 million barrels per day of crude flows. Under such a scenario, oil prices could surge to between $110 and $150 per barrel.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)