Oil Prices Rebound 7% as Strait of Hormuz Closes Again After US and Iran Accuse Each Other of Ceasefire Violations
Global crude oil prices surged more than 7% on Monday, April 20, snapping back sharply after a steep 9% fall on Friday, as the Strait of Hormuz closed once again following mutual accusations between the United States and Iran of violating the fragile ceasefire deal. The latest escalation has reignited fears of a prolonged disruption to global energy supply flows through the world's most critical oil and gas transit route.
Oil Price Movements
- Brent Crude Futures: Jumped $6.56, or 7.26%, to $96.94 per barrel.
- US West Texas Intermediate (WTI): Rose $6.07, or 7.24%, to $89.92 per barrel.
The sharp rebound follows Friday's dramatic selloff, during which both benchmarks had tumbled more than 9% on optimism that the ceasefire would lead to a sustained reopening of the Strait. That optimism has now evaporated, with both sides blaming the other for renewed attacks on ships in the waterway.
What Triggered the Renewed Closure
The Strait of Hormuz has closed again after both the United States and Iran publicly accused each other of breaching the terms of the ceasefire agreement by targeting vessels in the waterway. The mutual blame-game has effectively collapsed confidence in the ceasefire's durability and triggered an immediate return of geopolitical risk premium into energy markets.
The Strait of Hormuz is the single most important energy chokepoint in the world, through which approximately 20% of global oil and liquefied natural gas supply passes daily. Any sustained closure of the waterway poses a severe threat to global energy security, particularly for major importers such as India, China, Japan, and South Korea.
Why Markets Are Reacting So Sharply
The extreme volatility in oil prices over the past several days reflects the market's difficulty in pricing a conflict with no clear resolution path. On Friday, traders had priced in a hopeful scenario where the ceasefire would stick and Hormuz flows would gradually resume. Monday's 7% rebound signals that those expectations have been firmly repriced, with traders now back to assuming a prolonged disruption to energy supply rather than a quick normalisation.
The pattern of sharp swings, large intraday moves, and rapid reversals is consistent with markets operating in a state of high uncertainty, where geopolitical headlines can shift sentiment dramatically within hours. Analysts have repeatedly warned that until a durable, verifiable peace agreement is in place, oil prices will remain extremely volatile and sensitive to any fresh development in the region.
Implications for India and Emerging Markets
For India, the renewed Hormuz closure and resurgent crude prices represent a significant threat across multiple dimensions. As a country that imports over 85% of its crude oil requirements, sustained prices in the $90 to $100 range or above will continue to pressure the trade deficit, rupee, domestic fuel prices, and inflation. The RBI, which had been in an easing cycle earlier in the year, faces a particularly difficult balancing act between supporting growth and containing inflation in this environment.
Investors tracking Indian equities, bonds, and the rupee should brace for continued volatility in the near term. Energy-linked stocks, particularly upstream producers such as ONGC and Oil India, may see renewed support from elevated crude prices, while downstream refiners and consumer-facing sectors remain exposed to margin compression.
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