Crude oil prices are on a boil, and have emerged as a big headache for the Indian economy and also the stock market investors. The prices have jumped to their highest level in four years as the conflict in the has resulted in supply disruptions through the Straight of Hormuz, which accounts for nearly 25% of global oil passage.
remained on track to end higher for the second week, up 9%, as the US-Iran war entered its 14th day today. WTI crude futures have risen 6% this week and neared $96 per barrel.
Can oil prices top $150/bbl?
At the start of the week, Brent crude prices had neared the $120 mark only to cool off amid measures by the IEA to ease supply concerns. However, analysts are not ruling out the possibility of oil hitting the $150 mark if tensions in West Asia don’t de-escalate.
On a technical basis, $125 per barrel is the immediate resistance zone for crude oil prices, said Anindya Banerjee of Kotak Securities earlier this week. He added that if prices break above that decisively, the market could begin targeting the 2008 highs near $145–$150.
Similarly, FGE estimates that a four-eight-week outage could push crude to $110/150 per bbl, likely triggering demand destruction. This is especially bad for Asian countries like India, China, Japan and South Korea.
blockade could disrupt ~80mtpa of LNG from Qatar and Abu Dhabi, mainly affecting Asia (India, China, Taiwan, Pakistan, Bangladesh), with a daily loss of three cargoes (~230,000 tons).
Impact of oil at $150 on Indian stock market
The Middle East conflict has cast a pall of gloom over the , sparking one of the worst declines in recent times. The Nifty 50 index has already lost 8% in March so far as the surging crude oil prices have raised macroeconomic risks like widening fiscal deficit, pushed the , spurred FII selling, and significantly eroded investor wealth.
India is exceptionally vulnerable to this crisis because it imports over 85% of its oil needs, with roughly half transiting the Strait of Hormuz.
“The relationship between crude prices and India’s deficit is not linear; it is convex. At $150/barrel sustained through FY27, India’s oil trade deficit rises to $220 billion, pushing the current account deficit beyond 3% of GDP and potentially weakening the rupee sharply,” said Tanvi Kanchan, Associate Director, Anand Rathi Share and Stock Brokers Limited.
The only real silver linings are India’s active diplomacy: Iran has indicated Indian-flagged ships may be allowed safe passage, and the US backing India’s continued Russian oil imports as an alternative supply route, added Kanchan.
Any spike in crude prices above these levels is definitely a negative for the Indian stock markets. Inflation also remains a key concern.
Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital, said that there could be an input cost impact on multiple industries which depend on oil and its derivatives, thus total trade becomes difficult, as well as there is margin pressure on several companies.
“Most important, the potential unpredictability of inflationary impact on global trade and commodities is likely to make the , and other central banks very hesitant to cut interest rates for a couple of quarters,” he added.
Refining, petrochemicals, fertilisers, aviation and hospitality are majorly exposed sectors in India. The other sectors like paints, tyres & some auto stocks, OMCs, FMCG (discretionary items), Logistics & transport, mining, some banking and NBFCs (not directly impacted) are impacted on squeezed margins.
Mirae Asset Sharekhan had told Mint earlier this week that if crude oil prices remain elevated in the $85–$90 range for the next two months, earnings growth expectations may be revised lower to around 10% from 12-14% currently for FY27.
Can gold, silver prices gain amid US-Iran conflict?
One might think that this scenario could prove to be beneficial for commodities like . But the relation is not as linear.
“In theory, such an environment is supportive for gold as it acts as both a safe-haven asset and an inflation hedge. However, the current macro backdrop presents a two-sided dynamic,” said Manav Modi, Commodities Analyst, Motilal Oswal Financial Services.
While geopolitical tensions, investor hedging, and safe-haven demand support gold, rising oil prices could significantly increase inflation pressures at a time when tariff-related costs and US fiscal uncertainties are already influencing price stability. This may force central banks to delay expected rate cuts or even maintain higher rates for longer, which can cap gold’s upside initially, explained Modi.
He expects some consolidation before renewed buying emerges. are set for a second weekly loss as surging oil prices have dampened rate cut bets, while a rising dollar and US yields have also pressured prices. Since gold is a non-interest-yielding asset, it tends to benefit from a low-interest-rate environment.
, on the other hand, have industrial demand, which is dented when geopolitical tensions threaten economic prosperity. The supply disruptions will affect the manufacturing and technology sectors, which will be responsible for the softer gains for silver in the near term, said Netra DeshPande, Research Analyst, Mirae Asset ShareKhan.
“Gold will have a positive outlook over silver in the near term amid current Middle East conflicts. However, rising bond yields as inflation worries ticked up, supporting the US dollar, and raising uncertainty about Fed policy, will cap further upside,” the expert added.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.