As tensions between Israel and Iran continue, Brent crude—the key international benchmark—surged by 13% before stabilising around $74 per barrel.
Probal Sen, senior research analyst for the Indian Oil & Gas Sector at ICICI Securities Ltd. stated that escalation of conflicts would generally have a negative impact. However, if supply routes remain unaffected, crude prices are expected to settle between $70 and $75 per barrel, Sen said.
Iran produces 3.2 million barrels of oil every day. In 2023, it was the world’s second-largest source of supply growth after the US, according to the International Energy Agency.
This ongoing conflict between the two nations would drive oil price and could be a “matter of concern for emerging nations like India,” said Aniruddha Sarkar, chief information officer and portfolio manager at Quest investment Advisors Pvt.
Besides, MK Surana, former chairman and managing director, Hindustan Petroleum Corp., predicted that crude may return to $65-range by fourth quarter provided geopolitics remains favourable.
The Strait Of Hormuz
The strait Of Hormuz is a significant route through which crude oil is exported by Saudi Arabia, the UAE, Kuwait, Qatar, Iraq as well as Iran.
As Iran control’s this trade route, any additional disruption caused by the Israel-Iran conflict can disrupt the shipping routes, impacting the supply chains across the globe, Probal Sen said.
“Shipping routes across the world have been impacted over the last year,” Sen added.
Qatar, the world’s biggest liquefied natural gas exporter, sends almost all of its LNG through the Strait.
Impact Of Israel- Iran War On Markets
As the geopolitical turmoil between Iran and Israel escalates, global markets will be affected by oil price fluctuations, with crude potentially hitting lower levels, according to Lyn Alden, founder of Lyn Alden Investment Strategy.
She also emphasised that the delays in deals are mostly due to market uncertainty.
Dinshaw Irani of Helios Capital Management (India) constantly highlighted flattish market trend. However, he expressed positively, sharing that things could start improving from the festive season.
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