An expert from Kotak Securities predicts crude oil prices could hit USD 120/barrel short-term and potentially USD 150 if West Asia conflict extends. Supply disruptions are the key driver, but de-escalation could see prices drop to USD 55-65.
Price Projections Amid Geopolitical Tensions
Global crude oil prices could rise to USD 120 per barrel in the short term and potentially reach USD 150 per barrel if war extends over a month and geopolitical tensions continue in West Asia, Kayanat Chainwala, Assistant Vice President, Kotak Securities, told ANI today.
"Near-term crude prices are likely to move in the USD 85-120 range for WTI and USD 90-125 for Brent. If the conflict escalates and supply disruptions persist for several weeks, prices could rise even further, possibly approaching USD 150 per barrel. But in the short term, USD 120 is more likely," Chainwala said, emphasizing the role of supply disruptions in pushing crude markets higher.
Supply Disruptions and Market Impact
She explained that the ongoing turbulence in the Strait of Hormuz and the state of Hormuz situation has already caused losses of approximately 10-12 million barrels per day. "This is a significant disruption, not a perceived risk. Earlier this year, the market was facing a glut of 4-5 million barrels per day, but the current losses are offsetting that surplus and pushing the market toward a deficit," she said.
Chainwala added that emergency reserves, including the International Energy Agency's 400-million-barrel release, would only cover about 20 days of lost supply, which would be insufficient if the disruption continues for an extended period. "Any prolonged disruption through this trade will be bullish for crude oil and negative for other commodities, as it ignites inflation concerns and could delay interest rate cuts," he noted.
Potential for Price Correction
She also addressed potential price corrections. "If the situation de-escalates, the geopolitical premium built into oil prices would vanish. Prices could fall sharply to USD 55-65 per barrel. Before the disruption, oil markets were already bearish due to macroeconomic concerns and a supply glut," she said.
Strait of Hormuz Restrictions
On regional flows, she said the Strait of Hormuz is currently allowing only limited passage. "Very few barrels are passing through Hormuz -- around 2-3 million barrels per day, compared to normal flows of about 20 million barrels per day. Certain countries are receiving preferential access, but overall, the route remains highly restricted," Chainwala added.
Demand-Side Factors
She also discussed demand-side factors, highlighting that China, a major importer of crude, has set a modest growth target of 4.5-5 percent this year with no major stimulus, which may limit sustained price pressure. Seasonal demand during travel months in May and June may have some impact, but other factors are unlikely to hold crude prices at elevated levels for long.
Impact on Domestic Market
Regarding the domestic market, Chainwala said, "On MCX, crude prices could rise 20-30 percent from current levels of around Rs 8,300, reaching Rs 10,500-11,000, depending on how long the disruption continues."
Market Outlook and Volatility
She concluded by warning that prolonged conflict or significant escalation could push prices even further, but if negotiations or minor attacks continue without major disruption, the crude market is expected to remain volatile yet within a USD 85-120 range. (ANI)
(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)