Oil costs to hit $150? How Indian inventory markets might react as Iran struggle rages on
Crude oil costs crossed the important thing psychological mark of $100 per barrel final week, the primary time since Russia’s invasion of Ukraine in 2022. Regardless of makes an attempt by the US administration to reassure markets, the battle within the oil-rich Center East continues to accentuate.
Iran has warned that oil costs may surge to as excessive as $200 per barrel if the battle escalates additional. Mojtaba Khamenei, Iran’s new supreme chief and son of Ayatollah Ali Khamenei, described the Strait of Hormuz as a strategic “device of stress” that should stay shut throughout the battle. In a message aired on state tv, he additionally warned that US navy bases throughout the area may face assaults as Iran seeks retaliation for casualties from the battle.
Oil costs have risen amid rising expectations that the Strait of Hormuz might stay shut, disrupting international vitality commerce. The slim 33-km waterway connecting the Persian Gulf and the Gulf of Oman carries greater than 20% of the world’s oil and fuel shipments, making it one of the crucial important chokepoints in international vitality markets.
What lies forward for oil costs
International crude oil costs may rise to $120 per barrel within the close to time period and doubtlessly attain $150 per barrel if the struggle continues for over a month and geopolitical tensions stay elevated in West Asia, mentioned Kayanat Chainwala, Assistant Vice President at Kotak Securities.
“Any extended disruption to this commerce route shall be bullish for crude oil and unfavourable for different commodities, because it fuels inflation issues and will delay rate of interest cuts,” Chainwala mentioned.
A report by Nuvama additionally famous that crude costs may climb to $150 per barrel if the Strait of Hormuz stays closed for 4 to eight weeks. Nonetheless, such excessive worth ranges may ultimately result in demand destruction and set off various provide responses.The report added that Asian economies are more likely to bear the brunt of the disruption, as almost 13 million barrels per day (mbpd) of oil shipments to international locations together with China, India, Japan and South Korea move by the Strait of Hormuz.
In the meantime, Systematix Institutional Equities mentioned international crude markets have entered a section of heightened volatility over the previous two weeks, pushed by the destruction of oil and fuel property in West Asia, which has added a powerful geopolitical threat premium to costs.
“Tanker freight charges and insurance coverage premiums for vessels passing by high-risk zones have additionally surged, considerably elevating procurement prices,” the brokerage mentioned.
How Indian inventory markets might react
The Nifty 50 fell 5.3% final week because the Iran–Israel battle, a weakening rupee, persistent FII outflows and issues over gas provide weighed on sentiment. Whereas Systematix expects near-term volatility to impression valuations, it continues to want Reliance Industries, Petronet LNG, Deep Industries and Gulf Oil as long-term bets.
In line with Vinod Nair, Head of Analysis at Geojit Investments, market route within the coming weeks will largely rely on developments within the Iran battle and the trajectory of crude costs, given their implications for inflation, company margins, the present account deficit and RBI coverage flexibility.
“A agency greenback and better US bond yields might hold FIIs selective and volatility elevated. Selective worth alternatives might emerge in essentially resilient and domestically pushed sectors, whereas energy-sensitive segments may stay beneath stress if crude costs keep elevated,” he mentioned.
He added that home institutional shopping for has offered some cushion, however a sustained market restoration would doubtless require clear indicators of geopolitical de-escalation, stabilisation in crude costs and improved readability on gas provide dynamics.
Siddhartha Khemka, Head of Analysis – Wealth Administration at Motilal Oswal Monetary Providers, mentioned market volatility is more likely to persist as geopolitical tensions disrupt the vitality market and hold threat sentiment fragile.
“Indian equities have seen a pointy correction in 2026 amid heightened international uncertainty, leading to vital erosion of market worth throughout segments,” Khemka mentioned.
The Nifty 50 has declined over 11% to this point this yr, whereas the Nifty Midcap and Smallcap indices are down round 10% every. In March alone, the Nifty has fallen about 8%, marking its steepest month-to-month decline because the pandemic-driven crash of March 2020.
On the forex entrance, the Indian rupee lately hit a document low of Rs 92.45 in opposition to the US greenback as rising vitality costs and risk-off sentiment heightened issues about India’s present account deficit, given the nation imports almost 88% of its crude oil necessities.
Elevated oil costs have additionally intensified issues round inflationary pressures, widening exterior balances and stress on company margins, prompting traders to trim fairness publicity and shift in the direction of safer property.
“Fee-sensitive and cyclical sectors corresponding to banking, monetary companies and cars have seen notable promoting stress,” Khemka added.
Trying forward, markets are anticipated to stay extremely delicate to developments within the West Asia battle, actions in crude oil costs and tendencies in international fund flows.
“Persistent international outflows and elevated oil costs may hold sentiment cautious, whereas any indicators of easing geopolitical tensions might present aid to markets,” he mentioned.
(Disclaimer: Suggestions, solutions, views and opinions given by the specialists are their very own. These don’t symbolize the views of The Financial Occasions)