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Time of India
17 hours ago
- Business
- Time of India
icra: 4 reasons why crude oil is not likely to sustain $80/bbl. How is India impacted?
Here are 4 reasons why Brent may sustain $80 per bbl: 1) Iran's Strait of Hormuz gamble too costly to close ADVERTISEMENT 2) OPEC production 3) US Shale factor ADVERTISEMENT 4) Global oil demand growth projections ADVERTISEMENT Impact on India 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. ICRA too expects crude prices to average between $70-80/bbl for 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 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 has wielded the threat of disruption as a geopolitical bargaining tool, without crossing the line into direct confrontation, Yes 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 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 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 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 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 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.
Economic Times
21 hours ago
- Business
- Economic Times
4 reasons why crude oil is not likely to sustain $80/bbl. How is India impacted?
Crude oil may not sustain above $80/bbl despite Middle East tensions, say brokerages, citing factors like OPEC's spare capacity, stable US shale output, and weak global demand. For India, a $10/bbl price rise could inflate oil imports by $13–14 billion, hitting downstream margins and LPG subsidy costs. Tired of too many ads? Remove Ads Here are 4 reasons why Brent may sustain $80 per bbl: 1) Iran's Strait of Hormuz gamble too costly to close Tired of too many ads? Remove Ads 2) OPEC production 3) US Shale factor 4) Global oil demand growth projections Impact on India Tired of too many ads? Remove Ads 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. ICRA too expects crude prices to average between $70-80/bbl for 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 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 has wielded the threat of disruption as a geopolitical bargaining tool, without crossing the line into direct confrontation, Yes 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 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 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 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 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 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.
Time of India
21 hours ago
- Business
- Time of India
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.
Bloomberg
4 days ago
- Business
- Bloomberg
FTSE 100 Live: Pound Regains Ground, Oil Prices Extend Jump
Oil prices have pared an earlier rise but held onto the jump seen at the end of last week as Israel and Iran continue attacks on each other. Brent oil jumped by as much as 5.5% earlier, before paring that rise to around 0.6%. Israel launched an attack on the South Pars gas field, forcing the halt of a key production platform. The biggest fear remains around the Strait of Hormuz, where Middle East oil producers ship around a fifth of the world's daily output. Should Iran decide to block the route, it could cause prices to soar.
Yahoo
4 days ago
- Business
- Yahoo
‘Inevitable': Grim news for Aussie drivers
Australian motorists will 'inevitably' pay more when they fuel up their cars in the coming days, as energy producing stocks soar from the fallout in the Middle East. Futures markets for Brent oil have spiked in recent days and are now buying $US77 a barrel, when it was just over $US65 this time last week. It comes as tensions out of the Middle East flare up, after Israel undertook pre-emptive attacks on Iran. It said the strikes were aimed at eliminating Iran's nuclear program and ballistic missile capabilities. Iran has fired missiles back at Israel in response. Deputy Prime Minister Richard Marles said on Monday it was 'inevitable' Aussies will have to pay more at the pump. Mr Marles said the extent of the impact hostilities would have on Australia's economy 'depends a bit on how long the conflict goes and the way in which it plays out'. But he said it was 'right to focus on fuel'. 'Already we have seen over the course of the last few days the global oil price go up and it's the inevitable consequence of any conflict,' Mr Marles said. AMP chief economist Shane Oliver wrote in his latest economic note fuel prices could be on the rise for motorists, but how much they pay will depend on how long oil prices remain higher. 'Oil prices were already rising this month on signs of increasing risks and have spiked further – with the rise so far this month threatening a flow of around 12 cents a litre for Australian petrol prices if sustained at these levels,' he said. While motorists could be paying more to fuel up their car compared with the start of May when oil was at $US65 a barrel, Janus Henderson investment portfolio manager Oliver Blackbourn said the recent spike is still within the usual range for oil. 'The price of a barrel of oil had ranged between $70 and $90 through 2024, to put the recent moves in context,' he said. 'This period includes prior exchanges of strikes between Israel and Iran, and is still far below the levels above $100 per barrel in the wake of the Russian invasion of Ukraine in early 2022.' Mr Blackbourn said any further moves in the price of crude oil will be dependent on what happens next in the Israel-Iran conflict. On the ASX, the energy sector was up 5.7 per cent amid the higher oil prices and a takeover bid from Abu Dhabi state owned company logging a $30bn bid for Santos. Shares in Santos soared 11.87 per cent to $7.78 after the takeover announcement. Oil and gas giant Woodside jumped after the opening bell and is up more than 3.3 per cent to $26.05 at the time of writing due to the increase in oil prices. Petrol and diesel producer Ampol also climbed 1.70 per cent to 426.25 while Woodside was also rallying on Monday, up 3.1 per cent, petrol and diesel producer Ampol climbed 1.9 per cent and Beach energy shares are up 2.69 per cent to $1.33. Error in retrieving data Sign in to access your portfolio Error in retrieving data
