Oil Price Today (July 16): Crude oil at $86, rises for 4th day as US-Iran attacks continue. What are experts saying?

Oil prices extended gains for a fourth consecutive session on Thursday as fresh U.S. strikes on Iranian military targets heightened concerns over a renewed escalation in the conflict and the risk of supply disruptions through the Strait of Hormuz.

The United States on Wednesday targeted Iran's coastal defence systems and missile sites after reimposing a naval blockade on Iranian ports. In response, Iran warned that it could further restrict regional energy exports, saying it was fighting an "existential war" against the U.S.

Crude oil price on July 16

Brent crude futures rose 33 cents, or 0.4%, to $85.28 a barrel. U.S. West Texas Intermediate (WTI) crude gained 42 cents, or 0.5%, to $80.02 a barrel. Both benchmarks had risen around 0.3% on Wednesday and remained close to the one-month highs touched earlier this week.


Crude prices have advanced this week as the conflict further disrupted supplies through the Strait of Hormuz, which accounted for about one-fifth of global oil and liquefied natural gas trade before the war began.

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

Hostilities between Iran and the U.S. resumed last week, undermining the fragile truce reached in June after several months of fighting. Analysts said Iran has indicated it could use its Houthi allies in Yemen to block the Bab el-Mandeb Strait, potentially opening another front in the conflict and threatening two of the world's most important energy shipping routes.

Where are prices headed?

Goldman Sachs said Brent crude could climb above $110 per barrel in the fourth quarter if the recovery in Gulf exports remains delayed. However, it expects prices to fall into the $60s by the end of the year if geopolitical tensions ease and production rebounds more quickly than anticipated.

"At the current point there are no signs of a ceasefire again. But in case there is a ceasefire immediately imposed, we don't expect Brent oil prices to fall beyond $70 per barrel. It is likely to remain the lower support for the near term," Pranav Mer, Senior Vice President, Currency and Commodity at JM Financial, told ETMarkets.

He added that normal supply through the Strait of Hormuz is unlikely to resume anytime soon, with both Iran and the U.S. claiming control over the passage. According to him, the conflict is likely to intensify further, making the movement of ships through the region increasingly difficult. "If we look at the price outlook for the near term, we see Brent trading between $70 and $95," he said.

Mer also believes oil prices have further upside. He expects Brent to move towards $92-$95 per barrel, with the pace of gains depending on how the conflict unfolds. Any further escalation, he said, could push prices above $100 per barrel in the near term.

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

Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, told ETMarkets that the market is responding less to the military action itself and more to the fading prospects of diplomacy. He noted that Tehran has set fresh conditions for restarting negotiations, and every new development is delaying the return of normal tanker movement through the Strait of Hormuz, where traffic had already remained well below pre-war levels.

According to Banerjee, the renewed uncertainty has restored the geopolitical risk premium in crude oil prices, with Brent now testing the upper end of Kotak Securities' base-case range of $70-$80 per barrel. If the conflict persists and shipping disruptions deepen, he expects prices to move to $85-$90 per barrel.

Nuvama Institutional Equities cautioned that a prolonged closure of the Strait of Hormuz could disrupt nearly 20 million barrels per day of crude oil flows. In 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)