The news of the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei, confirmed by Iranian state media today, has prompted Tehran to warn of strong retaliation. US President Donald Trump said the 86-year-old leader died on the first day of massive joint airstrikes.
Concerns Rise Over Oil Supply
More than 20% of the world’s oil supply passes through the Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. Heavy missile attacks in this area have raised fears of supply disruptions, driving up oil prices.
US WTI crude rose 3.19% to $67.29 per barrel, while Brent crude reached $72.87 per barrel on Friday. The possibility of an escalation of war in the Middle East over the weekend heightens market concerns.
Oil could surpass $100: Barclays.
Barclays, Britain’s second-largest bank, has raised its Brent crude price forecast to $100 per barrel. According to the bank, the worsening security situation in the Middle East and the threat of supply disruptions could cause a major shock to the market. The situation has worsened following US and Israeli attacks and Iran’s retaliatory strikes. Khamenei’s death has increased concerns in global markets.
Oil Markets First Panic, Then Recover
According to Equirus Securities, oil prices often surge by 25% to 300% during geopolitical crises, even if the supply impact is temporary. Prices typically rise sharply at first, followed by a gradual return to normal. The brokerage says the real challenge is not predicting the initial surge, but understanding how long the crisis will impact prices.
Major setback if Hormuz is affected
If the Strait of Hormuz is obstructed, oil prices could add a geopolitical premium of up to $2,040 per barrel, pushing prices to $95,110.
What will be the impact on India?
India is heavily dependent on crude oil imports, so rising oil prices pose an inflation risk. This could also increase the current account deficit and the burden of government subsidies. However, experts say that India has diverse import sources, strategic reserves, and adequate stocks, which can handle short-term shocks.
Impact on the Stock Market
Amid expectations of rising crude oil prices, oil marketing companies (OMCs) will be in focus on Monday. Refinery stocks may see gains. Tire and paint stocks will also be in focus, as these industries use petroleum-based raw materials.
