Brent crude can reach $ 95 per barrel
Crude oil prices are once again seeing a rise. The increasing military tension between America and Iran has increased the concern of the global oil market. Brent crude has again reached near $ 87-88 per barrel. Experts believe that if the situation does not improve, prices may go up to $95 per barrel or even higher in the coming days. This can have a direct impact on the economy, inflation, rupee and stock market of oil importing countries like India.
The relief of the peace agreement did not last long
Some time ago, after the interim peace agreement between America and Iran, there was hope that the prices of crude oil would continue to fall. During the war in April, Brent crude reached $ 126 per barrel, but later it fell by about 42%. However, due to the resumption of military action and increasing tension between the two countries, oil prices have picked up again.
Crude oil can go up to $95
Commodity experts of JM Financial say that at present there are no signs of ceasefire. In such a situation, Brent crude may remain in the range of 70 to 95 dollars per barrel in the near future. If the conflict in the Middle East escalates or oil supplies through the Strait of Hormuz are affected, prices may cross $100 per barrel.
Experts of Kotak Securities also believe that the market is currently deciding the price of oil keeping in mind the geopolitical risks. There may be fluctuations in the market for the next few months.
Why is there concern for India?
India imports about 90% of its crude oil requirement from abroad. In such a situation, the cost of oil in the international market has a direct impact on the country’s economy. According to experts, every $1 increase in the price of crude oil increases India’s annual import bill by about $2 billion.
Apart from this, more than 40% of India’s crude oil is imported through the Strait of Hormuz. If there is prolonged tension on this route, both oil supply and shipping costs may be affected.
Impact on rupee, inflation and stock market
Expensive crude oil may increase pressure on the Indian rupee because more dollars will have to be spent to import oil. This may increase the current account deficit and may also increase imported inflation. In such a situation, it will not be easy for the Reserve Bank of India (RBI) to cut interest rates.
Talking about the stock market, high oil prices can increase the production cost of companies. Its biggest impact may be on aviation, paint, chemical, cement and logistics sectors. At the same time, companies in the oil and gas sector can benefit from this.
What should investors do?
Experts say that investors should keep an eye on global developments for now. If tension increases in the Middle East, market fluctuations may increase. In such times, instead of taking investment decisions in panic, it would be better to adopt a long-term strategy. At the same time, if oil prices remain high for a long time, its impact can be visible on the Indian economy as well as the pockets of common people.
