He also noted that even if hostilities were to end immediately, it would still take “weeks to months” for Qatar to restore normal supply cycles after an Iranian drone attack on the country’s largest liquefied natural gas facility.
This is while Israel, America and Iran are continuing commercial attacks for the eighth day in a row. Just last week, before the conflict started, the price of oil was around $62 per barrel. However, by Friday, US crude futures had risen as much as 12% on fears of supply disruptions before paring some gains. Brent crude was up $7.28, or 8.52%, at $92.69 a barrel, while West Texas Intermediate (WTI) was up $9.89, or 12.21%, to close at $90.90 a barrel.
Markets were jittery as the escalation of conflict in the Middle East disrupted shipping and energy exports through the Strait of Hormuz. This narrow strait between Iran and Oman normally transports about one-fifth of the world’s crude oil and liquid natural gas.
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Why is it big for us?
India imports most of its crude oil requirements and half of these imports pass through the Strait of Hormuz. About 2.6 million barrels of Indian oil pass through the corridor every day.
The Middle East accounts for 17% of India’s exports, compared to the US and EU, provides 55% of its crude oil, and accounts for 38% of its labor remittances, which were $45 billion in FY24 alone, according to calculations by global brokerage firm Jefferies. Risk aversion response. Higher energy costs raise commodity prices for companies, reduce corporate margins and weaken consumer spending.
Historically, sectors such as aviation, paints, chemicals and logistics face the most pressure when oil prices rise sharply. At the same time, upstream oil producers and energy companies usually benefit from higher oil prices.
Short-term price spikes caused by geopolitical tensions often reverse when supply routes open up quickly. However, continued disruption to Gulf exports could push global markets into a period of high inflation, weak growth and increased volatility.
How will the Indian stock market open on Monday?
Indian equity markets are likely to start next week on a cautious note as global risk sentiment has worsened sharply. The current trend in the GIFT Nifty, which closed around the 24,300 level, indicates a bearish undertone compared to the Nifty close of 24,450, said Hariprasad K of Levelling Wealth.
This combination of macroeconomic uncertainty and geopolitical risk is likely to affect market sentiment in the near term. Unless there is a positive development in the Middle East conflict that lowers crude oil prices, Indian markets may witness continued volatility.
From a technical perspective, Parvesh Gaur of Swastika Investsmart said the Nifty is supporting around 24,300 but remains highly volatile. On the upside, the 24,900 to 25,000 range is expected to act as an immediate supply zone, where selling pressure could be generated if the index tries to recover. On the downside, 24,300 remains the primary key support, and if the index breaks below this level, 23,800 will be the next key support area that traders will closely monitor.
((rejection: The recommendations, suggestions, opinions and views given by the experts are their own. (It does not represent the views of The Economic Times.)
