Israel launched attacks on Iran’s capital Tehran to remove what it called “an existential threat”. The attacks came as talks between the US and Iran over nuclear de-escalation failed to reach an understanding. The US has backed the Israel’s attacks. Iran has retaliated to the attacks.
“Uncertainty prevails, fear is pushing prices higher today,” Tamas Varga, an analyst at PVM was quoted as saying by Reuters. “It is completely driven by the outcome of the Iranian nuclear talks and possible military action the U.S. might take against Iran.”
Quoting Barclays Bank, IANS reported that Brent crude could rise to around $80 per barrel in the event of any significant supply disruption as the market is experiencing a risk premium due to geopolitical tensions, although any escalation may not necessarily lead to an immediate supply disruption.
The benchmarks Brent and the US WTI surged over 3% in the previous session and could extend their gains on Monday when trading resumes.
The US WTI crude oil futures ended at $67.29 per barrel, gaining $2.08 or 3.19% in a single session while Brent witnessed an even sharper surge of 3.4% or $2.37 per barrel to close at $72.87.
The Brent and WTI benchmarks are currently trading at their highest levels since July and August.President Donald Trump called the strikes a “major combat operations in Iran” in a video released on social media. The strikes were launched near the offices of Supreme Leader Ayatollah Ali Khamenei.
The war-like situation is likely to impact operations through the Strait of Hormuz, a 21-mile-wide waterway which remains a critical passage for global supply. Approximately 13 million barrels per day pass through the Strait — roughly 31% of all seaborne crude oil on earth.
Commodity and currency expert Anuj Gupta expects a sharp spike on Monday, hinting at Brent testing the $75 per barrel mark while WTI scaling $70 levels.
Crude oil prices have been on fire rising by nearly 5% or $3.39 in February while extending the 2026 gains to a $12.21 per barrel, implying a 20.10% year-to-date increase.
The war premium is expected to grow if the crisis is not contained in time.
Strategy for oil traders
Gupta suggests buying MCX Crude oil futures at Rs 5,950-6,000 with a stop loss of Rs 5,750 and a target of Rs 6,350-6,500.
Impact on equity markets
High crude oil prices are expected to be sentimentally negative for domestic equity markets when trading resumes on Monday.
Kranthi Bathini, Director-Equity Strategy at WealthMills Securities said a level above $80 per barrel could be a strong negative. He expects a choppy trade on Monday, expecting sharp cuts that may stay over a near term.
India’s benchmark indices Nifty and the BSE Sensex, ended with deep cuts on Friday amid selling pressure across the board. Auto, financials and FMCG were major laggards while the IT sector saw selective buying action. In a volatile session, the broader Nifty edged lower by 317.90 points, or 1.25%, to close at 25,178.65, while the 30-share Sensex plunged by 961.42 points, or 1.17%, to settle at 81,287.19.
Sectors in focus
Oil marketing companies like Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation (HPCL) and Oil India Limited could be in focus and may see selling pressure, if oil prices jump sharply.
High prices impact refining margins of OMCs, hitting their bottom lines.
Moreover, tyre and paint stocks could also come under pressure. Crude oil is a key raw material source for both paint and tyre companies because many of their inputs are petroleum-based derivatives.
Also read: Iran-Israel tensions likely to trigger choppy trade on Monday. What should investors do?
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
