“Crude oil prices are likely to move in the range of $85-120 for WTI and USD 90-125 for Brent. If the conflict widens and supply disruptions continue for several weeks, prices will rise further, possibly closer to $150 per barrel. But in the short term, the role of the USD is more likely.” Supply constraints in increasing crude markets.
She explained that the ongoing crisis in the Strait of Hormuz and the condition of Hormuz now has a loss of 10 to 12 million barrels per day.
“This is significant volatility, not significant risk. At the beginning of this year, the market was suffering from a shortfall of 4-5 million barrels per day, but the current losses offset this additional loss and push the market into the deficit,” she said.
China added that emergency reserves, including the International Energy Agency’s release of 400 million barrels, would cover only 20 days of lost supplies, which would be insufficient if the disruption continued for a long time.
“Any long-term disruption through this trade would be positive for crude oil and negative for other commodities, as it could raise inflation concerns and delay interest rate cuts,” he noted.
She also hinted at possible price adjustments. “If the situation worsens, the geopolitical premium built into oil prices will disappear. Prices will quickly fall to $55-65 per barrel. Before the turmoil, oil markets were suffering due to macroeconomic concerns and oversupply,” she said. she said
“Very few barrels flow through Hormuz — about 2-3 million barrels per day, compared to the normal flow of about 20 million barrels per day. Some countries get preferential access, but overall, the route remains very limited,” Chinwala added.
She also spoke about demand-side factors, noting that China, a major oil importer, has set a moderate growth target of 4.5-5 percent this year with no major stimulus, which may limit continued price pressure. Seasonal demand during the travel months of May and June may have some impact, but other factors are unlikely to keep prices at high levels for long.
On the domestic market, Chinawala said, “At MCX, crude oil prices could rise by 20-30 percent from the current level of Rs 8,300 to Rs 10,500-11,000, depending on how long it lasts.”
She concluded by warning that a prolonged dispute or a significant increase could push prices further, but if negotiations or small strikes continue without major disruption, the crude market is expected to remain volatile in the 85-120 USD range.
