The escalating Middle East crisis has sent shockwaves through global commodity markets, triggering a massive surge in both energy and precious metal prices. As military strikes involving Israel, the United States, and Iran intensify, investors are rushing toward safe-haven assets. Meanwhile, severe shipping disruptions have sparked fears of a worldwide energy shortage.
Reports differ on the exact timeline of the escalating conflict, with one source indicating the war has entered its seventh day, while another reports an eighth straight day of military exchanges. Regardless of the timeline, the geopolitical fallout is directly impacting global markets. Brent crude and gold have experienced dramatic spikes, reshaping near-term economic forecasts and raising concerns about global inflation.
Energy Markets React to Strait of Hormuz Closure
Oil prices have skyrocketed following severe disruptions along the Strait of Hormuz, a critical maritime route that typically handles one-fifth of global crude oil and liquefied natural gas supplies. With the waterway effectively closed over the past week, approximately 140 million barrels of oil—equivalent to 1.4 days of global demand—have been blocked from reaching international buyers.
Before the recent hostilities, crude oil was trading near $62 per barrel. By the end of the trading week, West Texas Intermediate (WTI) crude had jumped 12.21% to close at $90.90 per barrel. Brent crude experienced a similar rally, rising 8.52% to settle at $92.69 per barrel. Despite this massive weekly gain of more than a quarter, Bloomberg noted that prices still remain far below the historic peaks observed immediately after Russia invaded Ukraine.
Energy experts warn that the situation could deteriorate further. According to an interview in the Financial Times, Qatar’s energy minister expects all Gulf producers to suspend exports within weeks, a scenario he believes could push oil prices to $150 per barrel. John Kilduff, a partner at Again Capital, noted that the worst-case scenario is unfolding, making previous forecasts of $100 per barrel highly likely in the near future. Executives from four major trading houses echoed this sentiment, suggesting prices could breach the $100 mark within days if the conflict does not de-escalate.
Equirus Securities analysts project that even a partial disruption in the Strait of Hormuz could establish a structural geopolitical premium of $20 to $40 per barrel, potentially driving crude into the $95 to $110 range.
Precious Metals Rally on Safe-Haven Demand
As the Middle East crisis deepens, gold and silver have seen significant gains driven by intense safe-haven demand and global economic uncertainty. International spot gold surged by $85.74 to reach $5,174.23 per ounce, bouncing back aggressively from recent pullbacks.
In India, the precious metal mirrored this global rally across all purity levels. The price for 24-carat pure gold in Delhi leaped by ₹2,520, reaching ₹1,63,800 per 10 grams. Similarly, 22-carat jewelry gold climbed to ₹1,50,150, and 18-carat gold rose to ₹1,22,880. According to Jateen Trivedi, Vice President and Research Analyst at LKP Securities, gold prices remain highly volatile. He advised that the current market dips present an opportunity for investors to buy, noting that technical indicators suggest the recent declines might be slowing down as buyers defend lower levels.
Silver prices have also maintained their strength following a recent 3% international rebound. Spot silver stabilized at $84.70 per ounce globally, heavily supported by both geopolitical fears and structural industrial demand from the electronics and solar energy sectors. Within the Indian market, silver is trading steadily between ₹2.85 lakh and ₹2.90 lakh per kilogram. Southern cities like Chennai and Kerala are currently commanding a premium of up to ₹5,000 per kilogram over northern metropolitan areas like Delhi and Mumbai.
Geopolitical Escalations and Economic Fallout
The military conflict continues to widen, introducing new risks to international security and trade. Iranian officials recently criticized the United States after a torpedo sank the warship IRIS Dena, which was reportedly hosting Indian navy guests. As the conflict intensifies, Iran has also hinted at deploying previously unseen weapons, while US and Israeli forces have ramped up their joint strikes.
For importing nations, the financial strain is becoming severe. JM Financial reports that every $1 increase in crude oil prices adds roughly $2 billion to India’s annual import bill. This dynamic threatens to elevate domestic logistics costs, widen trade imbalances, and push inflation higher. Consequently, the Indian Rupee faces a near-term depreciation bias, which could prompt the Reserve Bank of India to intervene using its foreign exchange reserves.
In response to the volatile energy landscape, the United States has granted India a 30-day waiver to purchase Russian oil. Market analysts are closely monitoring the relationship between different commodities to predict future movements. Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, highlighted that the current gold-to-crude ratio sits at an elevated level of 62. If this ratio compresses toward the historical 45 to 55 range, Sheth mathematically projects crude oil prices could climb further into the $95 to $115 range, assuming gold remains broadly stable.
