Brent crude prices might surpass $90 per barrel if the Strait of Hormuz faces disruption or even exceed $100 per barrel in a broader regional conflict, as per a recent report. Currently standing at around $72.8 per barrel, any limited retaliation could add $5–10 per barrel, while direct damage to Iranian oil infrastructure could increase it by $10–12 per barrel.
The report also highlighted that for every $1 rise in crude prices, India’s annual import bill could surge by about $2 billion, thereby impacting the trade balance significantly. Approximately 20% of global oil flows pass through the Strait of Hormuz, with more than 40% of India’s crude imports relying on this route.
Market trends are expected to shift from earnings-focused to oil-focused trading in the short term, the report suggested. Sectors like upstream energy and defense might witness relative support, whereas industries sensitive to oil prices such as OMCs, paints, tires, aviation, and chemicals could face margin pressures, according to the brokerage’s forecast. Crude prices remain a crucial macro variable for Indian equities amid the current escalation scenario.
The report further explained that a potential near-term depreciation bias for the INR could be seen, with likely RBI intervention using FX reserves to stabilize the situation. The correlation is clear: higher crude prices elevate inflation risks, leading to increased bond yields, which in turn impact equity multiples. Prolonged tensions could escalate logistics and marine insurance costs, disrupt Gulf shipping routes, and strain the trade balance.
In terms of market impact, upstream oil producers like ONGC and Oil India may benefit from stronger realizations, while defense entities such as HAL and BEL could receive sentiment support, the report added. Recent strikes by the US and Israel targeting Iranian nuclear facilities, missile infrastructure, and command centers have escalated tensions, with Iran retaliating by launching missile and drone attacks on US bases across the Middle East.
