Global oil prices to rise as US, Israel launch massive attack on Iran
Oil prices are expected to rise due to the "massive combat operation" launched by the US and Israel on Iran which brings the Strait of Hormuz into the war zone, leading to a disruption in crude exports from the Middle East countries.
Over 20 per cent of the world's oil supply is shipped out of the Strait of Hormuz which links the Persian Gulf with the Gulf of Oman and the Arabian Sea. With heavy missile bombardment and US President Donald Trump announcing that an annihilation of Iran's navy was an important objective of the military operation launched by the US on Saturday, the movement of oil from the region would be disrupted.
Analysts expect oil prices to go up due to a "war premium" that has to be factored in due to the large scale coordinated US and Israel attack on Iran marking a major escalation in the geopolitical conflict with Tehran launching retaliatory strikes in the region.
Oil prices settled 2 per cent higher at the end of trade on Friday, with Brent crude settling at $72.48 per barrel, influenced by escalating tensions between the United States and Iran amid concerns about potential disruptions to oil supplies.
Barclays Bank stated 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.
Meanwhile, India has strengthened its energy security by diversifying its oil imports to countries outside the Gulf in the past few years and a large volume of supplies do not come through the Strait of Hormuz now, a senior official said.
He pointed out that the country's oil marketing companies (Indian Oil, Bharat Petroleum and Hindustan Petroleum) have supplies for several weeks and continue to receive energy supplies from several routes.
India imports around 85 per cent of its crude oil requirement and a surge in oil prices leads to an increase in its oil import bill and pushes up the rate of inflation which hurts economic growth.
However, India has diversified its oil sources by increasing imports from other regions including the US and Africa as well as building resilience through strategic crude reserves. India has oil storage capacity at Pudur of 2.25 million metric tonnes (MMT), the Visakhaptnam facility has the capacity to store 1.33 MMT of crude oil while Mangalore has a storage capacity of 1.5 MMT. Besides, another strategic reserve facility is being built at Chandikhol which is also on the sea coast.
The country can fall back on these strategic oil reserves in times of emergency. These reserves can also be dipped into at times when global prices skyrocket to provide a cushion to the national oil companies.
Israel-Iran war buzz may weigh on Indian markets, weak opening likely
Rising geopolitical tensions in the Middle East are likely to cast a shadow on global equity markets, including India's Dalal Street, market experts said on Saturday.
Market experts noted that while the escalation in the Israel-Iran conflict may trigger caution among investors, the Indian stock market may open weak rather than witness heavy panic selling.
The concerns came after Israel launched what it described as "preventive" strikes on Iran, sharply escalating tensions in the region.
According to earlier reports, explosions rocked Tehran, and multiple areas in the Iranian capital were hit.
In response, the Israel Defence Forces (IDF) said in a post on X that sirens were sounded throughout Israel and advance alerts were sent to mobile phones, instructing residents to stay close to protected spaces.
The military described it as a proactive step to prepare the public for the possibility of missile attacks.
Market experts said such geopolitical risks usually hurt equities in the short term as investors move towards safer assets.
However, they pointed out that the Indian market had already seen strong selling pressure in Friday's session.
As a result, Monday's trade may not witness a steep fall or a major gap-down opening.
According to analysts, the mood on Dalal Street is expected to remain cautious, with sideways-to-negative movement likely as traders wait for further clarity, particularly regarding any announcement on the next round of US-Iran talks.
They believe the immediate reaction may be limited, but volatility could persist if tensions escalate further.
On the technical front, experts noted that the Nifty 50 index has turned weak after closing below its 200-day exponential moving average (EMA).
"The index has formed its fourth consecutive red candle, signalling a weakening medium-term trend and a shift towards bearish sentiment," an expert stated.
Technically, immediate resistance for the Nifty 50 is seen in the 25,300–25,350 range, while strong support is placed around the 25,000–25,050 zone, as per the market experts.
"If the index holds above the support level, some stability may return. However, a decisive break below this range could trigger further downside pressure," an analyst mentioned.
Israel-Iran conflict pushes Gold above Rs 1.60 lakh; Silver follows
Gold and silver prices are expected to open sharply higher on Monday as escalating tensions between Israel and Iran push investors towards safe-haven assets, market experts said on Saturday.
Experts believed that rising uncertainty following Israel's "preventive" strikes on Iran could drive investors towards gold and silver, boosting prices further.
Tehran was rocked by massive explosions on Saturday after Israel launched what it described as "preventive" missile strikes against Iran, dramatically escalating tensions in the region.
Against this backdrop, analysts said the rising war buzz is expected to fuel uncertainty in financial markets.
"The escalation in the US-Iran war buzz is expected to fuel uncertainty, and investors are expected to look at gold and silver as a safe-haven asset. We expect a gap-up opening for precious metals," an expert stated.
They noted that COMEX gold is currently facing resistance at $5,300 per ounce. "If the metal breaks above this level, domestic gold prices could climb to Rs 1,68,000 to Rs 1,70,000 per 10 grams," a market expert explained.
On the technical front, MCX Gold has moved decisively above the Rs 1,60,000 mark after breaking out of a previous consolidation range.
Prices are now stabilising near Rs 1,62,000. Analysts believe that as long as gold sustains above Rs 1,60,000, it may move towards Rs 1,63,500 to Rs 1,65,000 in the near term.
MCX Silver has also witnessed a strong breakout, accelerating towards the Rs 2,80,000 to Rs 2,85,000 range.
"If momentum continues and prices hold above key support levels, silver could extend gains towards Rs 2,90,000 to Rs 2,95,000," an expert noted.
Meanwhile, earlier in the day, the Israel Defence Forces (IDF) said in a social media post on X that sirens were sounded throughout Israel, with an advance instruction alert directly to cellular devices to stay within proximity to protected spaces.
