Brent crude falls 1.36% to $112.88 as West Asia conflict hits third month
Synopsis
Crude oil prices fell up to 2% on Tuesday even as the US-Iran conflict over the Strait of Hormuz — through which 20% of the world's daily oil supply flows — entered its third month. The drop came after an overnight surge to $114, underscoring just how volatile energy markets have become as missile and drone attacks threaten to collapse a fragile ceasefire.
Key Takeaways
Brent crude fell 1.36% to $112.88 per barrel on 5 May , reversing an overnight rally to nearly $114 .
WTI dropped 2.34% to $103.92 per barrel ; MCX crude futures slipped ₹109 to ₹9,578 .
Iran reportedly launched attacks in the Gulf as both sides contest control of the Strait of Hormuz , which carries 20% of global daily oil and gas supply.
US President Donald Trump ordered US escorts for stranded tankers through the Strait, which has been largely blocked since February .
The Indian rupee traded at 95.31 against the dollar, after closing at a record low of 95.09 in the previous session.
Global crude oil prices fell sharply on Tuesday, 5 May, dropping up to 2 per cent despite a fresh escalation in West Asia, as the conflict between the United States and Iran entered its third month. The pullback came after an overnight rally that had briefly pushed Brent crude to nearly $114 per barrel.
Key Price Movements
The international benchmark Brent crude slipped 1.36 per cent to $112.88 per barrel, while US West Texas Intermediate (WTI) fell a sharper 2.34 per cent to $103.92 per barrel. On the domestic front, crude oil futures (June 18 contract) on the Multi Commodity Exchange (MCX) traded lower by 1.12 per cent, or ₹109, at ₹9,578.
Strait of Hormuz at the Centre of the Crisis
Iran reportedly launched attacks in the Gulf in response to US moves, as both sides contest control over the Strait of Hormuz — a critical chokepoint that carries nearly 20 per cent of the world's daily oil and gas supply. The latest missile and drone attacks followed a decision by US President Donald Trump to escort stranded tankers and cargo ships through the Strait, which has been largely blocked since the US and Israel launched their campaign against Iran in February. Both sides carried out attacks in the Gulf, raising fears that a fragile ceasefire could collapse entirely.
Market Reaction and Expert View
A market expert noted that the resumption of hostilities in the Hormuz region and Brent crude rising again to around $113 represent significant headwinds for global markets. The price easing on Tuesday was broadly seen as a correction after the prior session's sharp rally, rather than a fundamental shift in the supply outlook. Notably, this is the third consecutive week of elevated volatility in crude markets tied directly to the West Asia standoff.
Rupee Under Pressure
The Indian rupee opened 22 paise lower on Tuesday, hovering near record lows. The currency was trading at 95.31 against the dollar, after closing at a record low of 95.09 in the previous session. A weaker rupee compounds the impact of elevated crude prices on India's import bill, raising concerns about inflation and the current account deficit.
What to Watch Next
With the Strait of Hormuz remaining a flashpoint and no diplomatic resolution in sight, analysts expect crude price volatility to persist. Any further escalation — or a breakdown of the fragile ceasefire — could push Brent back above the $114 threshold seen overnight, intensifying pressure on oil-importing economies like India.
Point of View
Not a structural retreat. The Strait of Hormuz carrying 20% of global oil supply is now an active conflict zone, and markets are pricing in a risk premium that could become a floor rather than a ceiling. For India, the double bind is acute: a weakening rupee amplifies every dollar move in crude, and with the currency already at record lows, the import bill arithmetic is deteriorating fast. The real question is not whether oil stays above $110, but how long India's subsidy and fiscal calculus can absorb it if the ceasefire collapses entirely.
NationPress
11 Aug 2026
Frequently Asked Questions
Why did crude oil prices fall on 5 May despite the West Asia conflict?
Crude oil prices fell up to 2% on 5 May primarily as a correction after a sharp overnight rally that had pushed Brent crude to nearly $114 per barrel. The dip reflects short-term profit-taking rather than any easing of the underlying geopolitical tension between the US and Iran.
What is the Strait of Hormuz and why does it matter for oil prices?
The Strait of Hormuz is a narrow waterway connecting the Gulf to global shipping lanes, through which nearly 20% of the world's daily oil and gas supply passes. Any disruption to traffic through the Strait — as is currently occurring due to US-Iran hostilities — directly threatens global energy supply and drives crude price volatility.
How is the West Asia conflict affecting the Indian rupee?
The Indian rupee fell to a record low of 95.09 against the dollar in the previous session and was trading at 95.31 on Tuesday. Elevated crude prices increase India's oil import bill, widening the current account deficit and putting downward pressure on the rupee.
What action did US President Donald Trump take regarding the Strait of Hormuz?
US President Donald Trump ordered the US military to escort stranded tankers and cargo ships through the Strait of Hormuz, which has been largely blocked since the US and Israel launched their campaign against Iran in February. Iran reportedly launched fresh attacks in the Gulf in response to this move.
What are analysts watching next in the crude oil market?
Analysts are monitoring whether the fragile ceasefire in the West Asia region holds, as any further escalation could push Brent crude back above the $114 level seen overnight. Continued Strait of Hormuz disruptions and the trajectory of the US-Iran standoff are the primary variables driving near-term price direction.
