Further, Qatar’s energy minister told the Financial Times he expects all Gulf energy producers to shut down exports within weeks, a move he said could drive oil to $150 a barrel, according to an interview published on Friday. Also Read | Sensex slips over 7% this year. Should mutual fund investors continue SIPs or hit pause?
What are experts saying?
“The worst-case scenario is developing before our eyes,” John Kilduff, a partner at Again Capital, said. “I think the forecasts of $100 a barrel are about to come true.”
The combination of commodity cycle rotation, an elevated Gold-Crude Oil ratio, and rising geopolitical risks suggests crude oil may be entering a stronger phase of the broader commodity cycle.
“With gold near $5,100 and the ratio around 62, crude is implied at roughly $82 per barrel. If the ratio compresses toward 55-45, crude oil prices would mathematically move toward the $95-$115 per barrel range, assuming gold remains broadly stable near current levels,” Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, said.Domestic brokerage JM Financial said that every $1 increase in crude prices raises India’s annual import bill by roughly $2 billion. Prolonged tensions could elevate logistics and marine insurance costs, disrupt Gulf shipping routes and widen pressure on the trade balance. The INR faces a near-term depreciation bias, with potential RBI intervention via foreign exchange reserves. The transmission mechanism is evident: higher crude prices increase inflation risks; elevated inflation pushes bond yields higher; and rising yields compress equity valuation multiples.
If tensions escalate to the point of threatening the Strait of Hormuz, the risk premium could become structural rather than proportional. Even the possibility of partial disruption in this critical chokepoint could add a $20-$40 per barrel geopolitical premium, potentially pushing crude back toward the $95-$110+ range, well beyond the direct mechanical impact of Iran’s supply loss alone, Equirus Securities said in a report.
While oil and gas prices have surged this week, they remain far below the highs seen just after Russia invaded Ukraine. There were signs on Friday that some of the initial oil market calm was dissipating, as Brent crude prices soared past $90 a barrel, taking their gain to more than a quarter this week, according to a Bloomberg report.
Still, executives at four large trading houses, who asked not to be identified, said the market was still too complacent about the likely impact of a prolonged closure of the Strait of Hormuz, and predicted prices could hit $100 in days unless there was some de-escalation of hostilities, the report added.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)