4 reasons why crude oil is not likely to sustain $80/bbl. How is India impacted?
While the Israel-Iran tension has kept crude oil on the boil with an 8% jump in the past eight days and 23% over a month, the black gold is unlikely to breach the $80 per barrel mark, according to estimates by a couple of brokerages.
"While the Iran–Israel conflict is serious and merits close monitoring, we reckon Brent Oil price is unlikely to sustain above US$80/bbl in a durable way unless the Strait of Hormuz is closed, or critical Gulf infrastructure is targeted," Yes Securities said in a note.
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
23.7% Returns in last 5 years with Shriram Life's ULIP
Shriram Life Insurance
Undo
ICRA
too expects crude prices to average between $70-80/bbl for FY2026.
Here are 4 reasons why Brent may sustain $80 per bbl:
1) Iran's Strait of Hormuz gamble too costly to close
Despite persistent geopolitical tensions and repeated threats, ranging from the Iran–Iraq War to post-Iran Nuclear deal fallout, Iran has never acted on its threat to close the Strait of Hormuz.
Yes Securities calls this restraint strategic and economic. The Strait handles nearly 20% of global oil consumption and is vital for Qatar's LNG exports, Iran's own trade, and the energy trade of regional allies like Iraq. A full closure would not only trigger military retaliation, particularly from the US, but also damage Iran's economic interests and international standing, this brokerage said.
Live Events
Tehran has wielded the threat of disruption as a geopolitical bargaining tool, without crossing the line into direct confrontation, Yes noted.
2) OPEC production
With OPEC holding spare capacity of 4mbpd—well above Iran's 1.5mbpd exports—and a projected global market surplus of 0.9mbpd before the Israel-Iran flare-up, there is ample supply cushion.
Yes believes that even if Iranian supplies of 1.5mbpd are taken out, OPEC's spare production capacity of 4mbpd is good enough to compensate for the fall.
3) US Shale factor
Since 2008, the rise of US shale has added millions of barrels per day to global supply, increasing flexibility and price elasticity. This has allowed the market to absorb geopolitical shocks more effectively, with tensions involving Iran, Libya, or Venezuela causing only short-lived price spikes.
"OPEC's diminished market share and increased spare capacity, especially from Saudi Arabia and the UAE, have further capped volatility, making oil prices more range-bound and positioning US shale as a soft ceiling on prices," Yes Securities said.
4) Global oil demand growth projections
China, which is the second largest consumer of oil, has seen a subdued demand post-COVID due to economic rebalancing and a weak real estate sector, Yes Securities said. Long-term energy transition trends such as the rise of electric vehicles, improved fuel efficiency, and supportive green energy transition policies are further restraining demand growth in OECD countries.
"This softened outlook is mirrored in recent agency forecasts. The International Energy Agency now expects global oil demand to grow by about 0.72mbpd in 2025, down from the earlier estimate of 1mbpd. EIA now projects global oil consumption to rise by 0.8mbpd in 2025, down from the earlier projection of 1mbpd," Yes said.
Impact on India
According to ICRA, crude oil imports from Iraq, Saudi Arabia, Kuwait and the UAE that pass through the Strait of Hormuz (SoH) account for 45-50% of total crude imports by India. Moreover, about 60% of the natural gas imports by India pass through the SoH.
A $10/bbl increase in the average price of crude oil for the fiscal year will typically push up net oil imports by $13-14 billion during the year.
At these elevated crude oil prices, while the profitability of upstream players will remain healthy and their capex plans will remain intact, the marketing margins of downstream players will be impacted, along with the expansion of LPG under-recoveries.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
14 minutes ago
- Time of India
Pornhub, RedTube and other major porn websites back online in France: Why were they banned and what has changed
Leading adult websites Pornhub , YouPorn and RedTube are once again accessible in France as a French court temporarily suspended a government decree that would have required EU-based pornographic platforms to implement stringent age verification measures. France had been rolling out new regulations this year, mandating that all adult websites verify users' ages through methods like credit card details or ID documents. The primary goal of these measures was to prevent minors from accessing explicit content. However, the Paris administrative tribunal on Monday put the government decree on hold, pending an investigation into its compatibility with broader European Union legislation, news agency AFP reported. It is to be noted that the French government has already signaled its intent to appeal this decision to the Council of State, the country's highest administrative court. Aylo, owner of these websites, wants government to rethink on age verification methods Aylo , the Cyprus-based owner of the three platforms, welcomed the decree's suspension as an "opportunity to reconsider more efficient approaches" to age verification. Earlier in June, Aylo had made its websites unavailable in France as a form of protest against the decree. Non-compliance could have led to significant penalties, including fines or website blocking. Aylo has consistently argued that the mandated age verification mechanism is not only ineffective but also poses an unacceptable security risk by exposing users' sensitive data to potential hacks or leaks. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 5 Books Warren Buffett Wants You to Read In 2025 Blinkist: Warren Buffett's Reading List Undo The company had previously displayed a message on its homepages stating, "Requiring you to repeatedly provide sensitive personal information creates an unacceptable security risk that we refuse to impose on our users." A 2024 study by the France's audio-visual watchdog revealed that approximately 40% of children access pornographic sites every month. To address privacy concerns, the suspended government decree also mandated that operators offer a third-party "double-blind" verification option, ensuring platforms couldn't view users' identifying information. Aylo has urge governments to instead require operating system makers, such as Apple, Microsoft and Google, to implement age verification at the device level. Other nations, including the UK and Germany, also enforce various age-related access restrictions for adult websites. AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
25 minutes ago
- Time of India
Iran expects India to condemn Israeli military actions against it
Iran expects India and other like-minded nations to condemn Israeli "military aggression" against it as such actions are "breach" of international law, a senior Iranian diplomat said on Friday. Mohammad Javad Hosseini, the deputy chief of mission at the Iranian embassy, also hoped that Pakistan would not do anything that will harm Iran's interest. His response on Pakistan came when asked at a media briefing about Pakistan Army Chief Field Marshal Asim Munir's meeting with US President Donald Trump in the White House on Wednesday. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like One of the Most Successful Investors of All Time, Warren Buffett, Recommends: 5 Books for Turning... Blinkist: Warren Buffett's Reading List Click Here Undo There is speculation that Washington was looking at using Pakistani military bases in case it decides to launch attacks on Tehran. Hosseini also said that India is a leader of the Global South and Iran expects New Delhi to condemn the Israeli actions of "breaching" international law by attacking a sovereign country. Live Events "We believe every country including India should condemn it (Israeli military actions), not because of their relations with Iran but because these actions are in breach of global norms," he said. Israel and Iran have fired hundreds of missiles and drones at each other's cities as well as military facilities since the hostilities began over a week ago. Asked if Iran was considering shutting the Strait of Hormuz, the Iranian diplomat did not give a direct reply and said several options are on the table. Nearly 30 per cent of the world's daily oil consumption passes through the Strait of Hormuz. According to the International Energy Agency, even a brief disruption of passage through the strait will have a significant impact on oil markets. "We have many things on the table, but it doesn't mean that we are going to do it now. It depends on the situation and how the other players want to go," Hosseini said. "If they want to solve the problem, definitely some of these things will be put aside," he added. Asked about possible impact of the hostilities with Israel on Iran's Chabahar port, the Iranian diplomat only said that any further escalation of tensions could have far-reaching implications for the flow of energy and other commodities. "It is not just a matter of Chabahar, it's a matter of the whole region. If it escalates, it will definitely affect many things, definitely the flow of oil, shipments and commodities which are going through these channels will be affected," Hosseini said. "Because of this, those countries who will be affected, it is better for them to think and to start stopping this aggression, to avoid any kind of negative effects on the economy of the region, which will definitely spread out to the whole world," he said.
Time of India
29 minutes ago
- Time of India
OpenAI CEO Sam Altman says AI can now compete with people who have PhD
Sam Altman , CEO of OpenAI , has issued stark warnings about the rapid advancement of AI. He previously said that AI can perform tasks on par with, or even exceeding, the capabilities of entry-level employees but has now added that it can compete with those holding PhDs. This comes at a time when people are facing job cuts in the tech industry, prompting experts to weigh in on which jobs will endure and how new graduates can secure them. Altman's latest comments, made on the "Uncapped" podcast hosted by his brother Jack Altman last week, amplify his earlier statements about AI's growing prowess. "In some sense AIs are like a top competitive programmer in the world now or AIs can get a top score on the world's hardest math competitions or AIs can do problems that I'd expect an expert PhD in my field to do," the OpenAI CEO said. AI-led job cuts in tech industry Altman's comments came amidst a backdrop of growing concerns from other tech leaders. Companies like Amazon have indicated plans to reduce corporate roles due to AI integration. Recently, Amazon CEO Andy Jassy told the company employees to skill themselves in AI to be ahead of the curve. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Thị trường có dấu hiệu suy thoái không? IC Markets Đăng ký Undo Notably, Anthropic CEO Dario Amodei has cautioned that AI could eliminate half of all entry-level, white-collar positions. Meanwhile, Google and Microsoft CEOs have already said that a certain percentage of code written at the companies are now AI-generated. However, despite these challenges, experts suggest the job market is shifting. The tech executives have maintained that while AI will eat away some jobs, new kinds of work will be created that will push people to acquire special skills. World Music Day 2025: Tech That Changed How We Listen to Music AI Masterclass for Students. Upskill Young Ones Today!– Join Now
