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First Post
an hour ago
- Business
- First Post
Israel-Iran war could set oil markets in fire, Goldman Sachs sees $10 per barrel spike
Goldman Sachs recently revised its assessment of geopolitical risk in oil markets, suggesting that Brent crude prices could climb by approximately $10 per barrel due to conflict in West Asia read more The escalation of hostilities between Israel and Iran has rattled global oil markets, with major financial institutions such as Goldman Sachs forecasting a significant spike in oil prices. According to analysts, the uncertainty surrounding regional stability, especially with the potential involvement of the United States, is poised to inject volatility into oil pricing, which had recently settled into relative calm. Geopolitical unrest alters price projections Goldman Sachs recently revised its assessment of geopolitical risk in oil markets, suggesting that Brent crude prices could climb by approximately $10 per barrel due to conflict in West Asia. This would place Brent above the $85 per barrel mark, rising from levels in the mid-$70s, as reported by Irina Slav. The bank noted that if Iranian oil supply were disrupted more severely prices could surge even further, possibly exceeding $90 per barrel. In particular, Goldman highlighted vulnerabilities in oil transport through strategic chokepoints such as the Bab el-Mandeb Strait, previously targeted by Yemen's Houthi rebels. These flashpoints illustrate the broader risks to oil infrastructure in a highly combustible region. STORY CONTINUES BELOW THIS AD Threat of US involvement intensifies market jitters Adding to market unease is the potential for the United States to enter the conflict. President Donald Trump has publicly flirted with the idea of US intervention, stating ambiguously, 'I may do it. I may not do it.' Though Trump has acknowledged internal political resistance to renewed military engagement in West Asia citing criticism from Republican figures like Steve Bannon, he also emphasised the threat of a nuclear Iran as a possible justification for action. As a result, traders are adopting a cautious stance. Oil prices initially dipped slightly amid the uncertainty with Brent crude settling at $76.56 per barrel and West Texas Intermediate (WTI) at $75.22, awaiting clearer US policy signals. War escalation sends prices climbing Events quickly shifted on the ground. Oil prices surged nearly 3 per cent as of June 19 following Israel's direct strikes on Iranian nuclear sites and Iran's retaliatory missile barrage, which included an attack on an Israeli hospital. Brent crude closed at $78.85 per barrel, its highest since January, while WTI climbed to $77.20. These strikes marked a dramatic escalation, dispelling any illusions of a short-lived skirmish. Israeli Prime Minister Benjamin Netanyahu vowed that Iran's leaders would 'pay the full price,' while Tehran warned against foreign nations—implicitly the US—joining the fray. Rory Johnston, analyst and founder of Commodity Context, said market consensus is tilting toward US participation in the conflict, which would significantly compound the risks to oil infrastructure and supply routes. Strategic chokepoints and oil supply at stake Iran's role as the third-largest oil producer in OPEC places it at the heart of this crisis. With a production output of approximately 3.3 million barrels per day, Iran remains a crucial supplier—particularly to China, which absorbs the majority of its 2 million daily barrels of crude exports. More critically, the Strait of Hormuz—a narrow passage bordering southern Iran—serves as the gateway for 18 to 21 million barrels of oil and oil products each day. RBC Capital analyst Helima Croft emphasised that this waterway could become a primary target if Iran perceives an existential threat. She warned that attacks on tankers and energy installations would likely follow any US military involvement. STORY CONTINUES BELOW THIS AD JP Morgan went further, positing a worst-case scenario in which conflict spreads across the broader region and leads to the closure of the Strait. Under such circumstances, oil prices could spike to between $120 and $130 per barrel. Risk premiums and market sentiment Goldman Sachs reiterated its position that a geopolitical risk premium of around $10 per barrel is now reasonable, considering the lower availability of Iranian oil and potential for wider supply disruption. Even in the event of a de-escalation, it believes that Brent prices will not return to the low $60s seen in the recent past. Similarly, Barclays warned that if half of Iran's oil exports were halted, Brent could hit $85 per barrel. A broader war could push prices past the $100 threshold. Price Futures Group analyst Phil Flynn noted that the market had been lulled into a 'complacency' that has now been shattered. 'The market has been underplaying geopolitical risk,' he said, arguing that this latest flare-up will keep prices elevated as long as uncertainty remains. Temporary or sustained price hike? Despite the price spike, some observers maintain that any surge will likely be short-lived. DBRS Morningstar, in a note released Thursday, cautioned that higher oil prices might hurt the global economy by intensifying tariff-related pressures and suppressing demand. In their view, once the conflict recedes, the war premium would deflate and oil prices could cycle lower. Nonetheless, the potential for prolonged instability keeps the market on alert. With no clear exit strategy from either Israel or Iran, and Washington's decision on intervention still pending, investors are bracing for further upheaval. Opec+ response and the global oil balance In response to the emerging tensions, Russian Deputy Prime Minister Alexander Novak advised the Opec+ alliance not to overreact. Speaking at an economic forum in St Petersburg, Novak recommended that oil producers stick to current plans to increase supply in light of rising summer demand. His comments sought to reassure markets and prevent price volatility from spiralling further. Yet, whether Opec+ output increases will be enough to stabilise prices amid the shockwaves of a regional war remains to be seen. Market dynamics are now driven more by geopolitical risk than traditional supply and demand fundamentals. STORY CONTINUES BELOW THIS AD A market on the edge The Israel-Iran conflict represents a potential inflection point for global energy markets. Analysts from Goldman Sachs to JP Morgan are now factoring in a war risk premium, with oil prices already trending upward and possibly heading for triple digits if the situation worsens. The spectre of US military involvement could dramatically shift the balance, not only disrupting Iranian exports but also imperiling vital shipping routes. While some believe any price surge would be short-lived, the combination of strategic vulnerability and political unpredictability suggests that volatility will persist for the foreseeable future. Whether oil prices stabilise or soar above $100 per barrel may ultimately depend not just on battlefield developments, but on decisions yet to be made in Washington.
Economic Times
3 hours ago
- Business
- Economic Times
IT stocks up 35% in less than 2 months. Can it withstand Fed caution and geopolitical risk?
Fed Pushes Back on Rate Cuts Live Events Geopolitical Risks Tariff Threats Outlook (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel After a sharp sell-off earlier this year, Indian IT stocks have delivered a striking comeback. The Nifty IT index has surged 10.5% in under two months, with several individual stocks posting even stronger gains. But with global headwinds intensifying—from a cautious US Federal Reserve to rising geopolitical tensions—the sustainability of this rally is now in question. Coforge has rallied nearly 35%, while Tech Mahindra and LTIMindtree are up 28% each. Persistent Systems Oracle Financial Services Software (OFSS), and Mphasis have posted gains of 16% to 22%. Even large-caps like Infosys and Wipro delivered double-digit returns in the same the rebound is starting to face resistance. Following the US Fed 's June policy meeting, the Nifty IT index slipped nearly 1%, signalling renewed caution among Federal Reserve kept its benchmark rate unchanged in June but raised its core PCE inflation projection—its preferred inflation measure—from 2.8% to 3.1% for 2025. Headline PCE is now expected to reach 3%, up from earlier estimates, indicating that price pressures are proving persistent.'The Federal Reserve's decision to hold interest rates steady comes as no surprise, given the persistent inflationary pressures in the U.S. economy,' said Suresh Darak, Founder, Bondbazaar. 'These pressures were... exacerbated by global conflicts pushing up oil prices and sustaining inflation.'At the same time, US GDP growth expectations have been revised down to 1.4%, raising concerns about delayed tech spending by large clients. 'Growth and inflation outlook is at loggerheads at this moment,' said Vaqarjaved Khan, Senior Fundamental Analyst at Angel One. 'Markets are interpreting this tone as somewhat hawkish.'With only one rate cut now likely in FY26, Indian IT companies that rely on US enterprise spending may see continued pressure on deal as rate uncertainty builds, global tensions are driving a fresh spike in oil prices. Over the last week, conflict between Iran and Israel has intensified, and there are fears that the US may get involved. Iran's Supreme Leader has threatened to block the Strait of Hormuz, a vital passage for nearly 20% of the world's oil shipments, while US President Donald Trump has hinted at a more aggressive US a result, Brent crude prices jumped more than 18% to $79, while WTI rose 18.5% to $75.7 over just seven trading Indian IT firms, a prolonged oil rally could lead to higher inflation globally, currency volatility, and tighter tech budgets for energy-sensitive risks are also back in focus as the US heads toward its presidential election. Fed Chair Jerome Powell recently warned that 'tariff effects on inflation can be persistent,' sparking concern for Indian IT exporters that depend on stable global trade flows.'Going forward, if the US Fed delivers a 50-bps rate cut in 2025, it would increase liquidity in the global markets,' said Khan. 'However... Middle East tension and tariff-related announcements by the US... could increase inflation expectations globally. If any of these risks play out at a larger extent, the upside scenario in Indian equities might get halted.'The recent 35% rally in IT stocks has been driven in part by easing attrition, improving margins, and hopes of a demand revival. But with the Fed turning cautious and geopolitical risks rising, the sector's near-term trajectory looks uncertain.'Jerome Powell's comment that 'despite heightened uncertainty, the economy is in solid position' is important. However, he has warned that 'tariff effects on inflation can be persistent'... With only 1.4% GDP growth expected this year, the US is unlikely to attract a lot of capital flows,' said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit IT names like LTIMindtree and Tech Mahindra dropped over 3% in a single session on June 19—reflecting the sector's sensitivity to global IT index's sharp bounce from its early-2025 lows shows that investors remain optimistic about long-term fundamentals. However, the path forward is likely to be sticky inflation, oil-driven macro risks, tariff uncertainty, and a cautious Fed, the sector's recovery rally faces real tests. Whether the momentum can continue—or gives way to another round of selling—may depend on how these risks evolve over the next quarter.: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
Time of India
3 hours ago
- Business
- Time of India
IT stocks up 35% in less than 2 months. Can it withstand Fed caution and geopolitical risk?
Coforge has surged nearly 35%, with Tech Mahindra and LTIMindtree each rising 28%. Persistent Systems, HCLTech, Oracle Financial Services Software (OFSS), and Mphasis have recorded gains between 16% and 22%. Even large-cap players like Infosys and Wipro have delivered double-digit returns during the same period. Tired of too many ads? Remove Ads Fed Pushes Back on Rate Cuts Tired of too many ads? Remove Ads Tariff Threats Tired of too many ads? Remove Ads Outlook After a sharp sell-off earlier this year, Indian IT stocks have delivered a striking comeback. The Nifty IT index has surged 10.5% in under two months, with several individual stocks posting even stronger gains. But with global headwinds intensifying—from a cautious US Federal Reserve to rising geopolitical tensions—the sustainability of this rally is now in question. Coforge has rallied nearly 35%, while Tech Mahindra and LTIMindtree are up 28% each. Persistent Systems Oracle Financial Services Software (OFSS), and Mphasis have posted gains of 16% to 22%. Even large-caps like Infosys and Wipro delivered double-digit returns in the same the rebound is starting to face resistance. Following the US Fed 's June policy meeting, the Nifty IT index slipped nearly 1%, signalling renewed caution among Federal Reserve kept its benchmark rate unchanged in June but raised its core PCE inflation projection—its preferred inflation measure—from 2.8% to 3.1% for 2025. Headline PCE is now expected to reach 3%, up from earlier estimates, indicating that price pressures are proving persistent.'The Federal Reserve's decision to hold interest rates steady comes as no surprise, given the persistent inflationary pressures in the U.S. economy,' said Suresh Darak, Founder, Bondbazaar. 'These pressures were... exacerbated by global conflicts pushing up oil prices and sustaining inflation.'At the same time, US GDP growth expectations have been revised down to 1.4%, raising concerns about delayed tech spending by large clients. 'Growth and inflation outlook is at loggerheads at this moment,' said Vaqarjaved Khan, Senior Fundamental Analyst at Angel One. 'Markets are interpreting this tone as somewhat hawkish.'With only one rate cut now likely in FY26, Indian IT companies that rely on US enterprise spending may see continued pressure on deal as rate uncertainty builds, global tensions are driving a fresh spike in oil prices. Over the last week, conflict between Iran and Israel has intensified, and there are fears that the US may get involved. Iran's Supreme Leader has threatened to block the Strait of Hormuz, a vital passage for nearly 20% of the world's oil shipments, while US President Donald Trump has hinted at a more aggressive US a result, Brent crude prices jumped more than 18% to $79, while WTI rose 18.5% to $75.7 over just seven trading Indian IT firms, a prolonged oil rally could lead to higher inflation globally, currency volatility, and tighter tech budgets for energy-sensitive risks are also back in focus as the US heads toward its presidential election. Fed Chair Jerome Powell recently warned that 'tariff effects on inflation can be persistent,' sparking concern for Indian IT exporters that depend on stable global trade flows.'Going forward, if the US Fed delivers a 50-bps rate cut in 2025, it would increase liquidity in the global markets,' said Khan. 'However... Middle East tension and tariff-related announcements by the US... could increase inflation expectations globally. If any of these risks play out at a larger extent, the upside scenario in Indian equities might get halted.'The recent 35% rally in IT stocks has been driven in part by easing attrition, improving margins, and hopes of a demand revival. But with the Fed turning cautious and geopolitical risks rising, the sector's near-term trajectory looks uncertain.'Jerome Powell's comment that 'despite heightened uncertainty, the economy is in solid position' is important. However, he has warned that 'tariff effects on inflation can be persistent'... With only 1.4% GDP growth expected this year, the US is unlikely to attract a lot of capital flows,' said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit IT names like LTIMindtree and Tech Mahindra dropped over 3% in a single session on June 19—reflecting the sector's sensitivity to global IT index's sharp bounce from its early-2025 lows shows that investors remain optimistic about long-term fundamentals. However, the path forward is likely to be sticky inflation, oil-driven macro risks, tariff uncertainty, and a cautious Fed, the sector's recovery rally faces real tests. Whether the momentum can continue—or gives way to another round of selling—may depend on how these risks evolve over the next quarter.: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
Time of India
4 hours ago
- Business
- Time of India
Brent futures down nearly $2 after US delays decision on direct Iran involvement
Brent crude prices pared gains from the previous session and fell nearly $2 on Friday after the White House delayed a decision on US involvement in the Israel-Iran conflict, but they were still poised for a third straight week in the black. Brent crude futures fell $1.89, or 2.4 per cent, to $76.96 a barrel by 0255 GMT. On a weekly basis, it was up 3.8 per cent. The US West Texas Intermediate crude for July - which did not settle on Thursday as it was a US holiday and expires on Friday - was up 53 cents, or 0.7 per cent, to $75.67. The more liquid WTI for August rose 0.2 per cent, or 17 cents to $73.67. Prices jumped almost 3 per cent on Thursday as Israel bombed nuclear targets in Iran, and Iran fired missiles and drones at Israel after hitting an Israeli hospital overnight. The week-old war between Israel and Iran showed no signs of either side backing down. Brent futures trimmed previous session gains following the White House's comments that President Donald Trump will decide whether the US will get involved in the Israel-Iran conflict in the next two weeks. " Oil prices surged amid fears of increased US involvement in Israel's conflict with Iran. However, the White House press secretary later suggested there was still time for de-escalation," said Phil Flynn, analyst at The Price Futures Group. Iran is the third-largest producer among members of the Organization of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day of crude oil. About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran's southern coast, and there is widespread concern the fighting could disrupt trade flows in a blow to supplies. "The "two-week deadline" is a tactic Trump has used in other key decisions. Often these deadlines expire without concrete action,.. which would see the crude oil price remain elevated and potentially build on recent gains," said Tony Sycamore, analyst at IG.
Business Recorder
6 hours ago
- Business
- Business Recorder
Brent futures down nearly $2 after US delays decision on direct Iran involvement
SINGAPORE: Brent crude prices pared gains from the previous session and fell nearly $2 on Friday after the White House delayed a decision on US involvement in the Israel-Iran conflict, but they were still poised for a third straight week in the black. Brent crude futures fell $1.89, or 2.4%, to $76.96 a barrel by 0255 GMT. On a weekly basis, it was up 3.8%. The US West Texas Intermediate crude for July - which did not settle on Thursday as it was a US holiday and expires on Friday - was up 53 cents, or 0.7%, to $75.67. The more liquid WTI for August rose 0.2%, or 17 cents to $73.67. Prices jumped almost 3% on Thursday as Israel bombed nuclear targets in Iran, and Iran fired missiles and drones at Israel after hitting an Israeli hospital overnight. The week-old war between Israel and Iran showed no signs of either side backing down. Brent futures trimmed previous session gains following the White House's comments that President Donald Trump will decide whether the US will get involved in the Israel-Iran conflict in the next two weeks. 'Oil prices surged amid fears of increased US involvement in Israel's conflict with Iran. However, the White House press secretary later suggested there was still time for de-escalation,' said Phil Flynn, analyst at The Price Futures Group. Iran is the third-largest producer among members of the Organization of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day of crude oil. Oil prices jump About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran's southern coast, and there is widespread concern the fighting could disrupt trade flows in a blow to supplies. 'The 'two-week deadline' is a tactic Trump has used in other key decisions. Often these deadlines expire without concrete action, which would see the crude oil price remain elevated and potentially build on recent gains,' said Tony Sycamore, analyst at IG.
