Oil Price Outlook: The Iran-America war that broke out in the Middle East has shaken the global commodity and oil markets…
highlights
- The Iran-America war that broke out in the Middle East has shaken the global commodity and oil markets.
- The situation worsened after the death of Iran’s supreme leader Ayatollah Ali Khamenei in these attacks.
- In response, Iran also launched missile attacks on Israeli as well as American targets.
Oil Price Outlook: The Iran-America war that broke out in the Middle East has shaken the global commodity market. The situation worsened after the death of Iran’s supreme leader Ayatollah Ali Khamenei in US and Israeli attacks. In response, Iran also launched missile attacks on Israeli as well as American targets. This tension has had a direct impact on the prices of crude oil, where a strong rise was seen in Brent crude. On Monday, there was a sharp movement in the shares of oil marketing companies in the Indian stock market.
Brent crude can go up to $90
Brokerage firm Citi said that in the current situation, Brent crude can trade in the range of $ 80 to 90 per barrel. If the tension eases quickly, prices may come back to around $70. However, Citi believes that prices could return to $62 in the second half of 2026, but the risk premium in the market may remain for now. If internal instability or regional war in Iran prolongs, oil prices could remain high for a long time.
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Brent crude rose 4% on Monday and has shown a rise of about 22% since the beginning of the year. At one time it jumped by 13% above $82 per barrel, which is considered to be the biggest rise in the last four years.
Heavy fall in OMC shares
The rise in oil prices had the biggest impact on Indian Oil Marketing Companies (OMCs). Shares of Bharat Petroleum Corp (BPCL) fell as much as 4.7% to around Rs 367, the biggest fall since June last year. Shares of Indian Oil Corp (IOC) and Hindustan Petroleum Corp (HPCL) also fell by 5% and 5.2%, respectively. The Nifty Oil and Gas index was down about 1.8%.
Around 11 am, HPCL was trading at Rs 432.70, BPCL at Rs 376.50 and IOC at Rs 180.48. Higher crude oil prices put pressure on the margins of OMC companies, as they have to purchase expensive crude, while the prices cannot be passed on to consumers immediately.
Shine seen in upstream companies
While refining and marketing companies remained under pressure, shares of upstream i.e. oil producing companies showed strength. ONGC shares rose 1.34% to Rs 283.45, while Oil India also saw slight gains. High oil prices are considered beneficial for these companies, because their revenue is directly linked to the price of crude.
War broke out between Israel and Iran
Let us tell you that on Saturday, America and Israel launched missile attacks on Iran, in which Iran’s supreme leader Ayatollah Ali Khamenei was killed. In response, Iran also retaliated. It targeted Israel as well as US military bases and bases in countries like Saudi Arabia, Qatar, UAE, Kuwait and Bahrain. This has further increased the tension throughout West Asia.
US President Donald Trump claimed that nine Iranian naval ships had been sunk in the attacks and military action would continue until all targets were met. This increasing tension directly affected the oil market. According to Bloomberg news, Brent crude jumped 13% to above $ 82 per barrel, the biggest rise in four years.
Strait of Hormuz becomes important concern
According to experts, about 20% of the world’s oil supply passes through the Strait of Hormuz. More than 40% of India’s total crude oil imports also come through this route. In such a situation, if there is any obstruction here, it can have a direct impact on India. On the other hand, oil producing companies like ONGC and Oil India may benefit from higher prices as their earnings are directly linked to crude oil prices. Its direct impact was also visible on the shares of these companies on Monday.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice in any way. ET NOW Swadesh recommends its readers and viewers to consult their financial advisors before taking any money-related decisions.
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