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Amid the Iran war, the price of crude oil had increased to $ 120 per barrel. file photo
Due to increasing tension between America and Iran, the prices of crude oil are rising once again in the global market. Brent crude oil today rose 4% to cross $ 98 per barrel, which is the highest level in the last 6 weeks. At the same time, American crude has also reached close to $89.50 per barrel.
Rising crude oil prices have increased inflation and energy crisis in India. This is likely to impact the flow of Indian Rupee and Foreign Portfolio Investment (FPI).
On the other hand, due to the cost of crude oil, there has been a huge pressure on the retail fuel margins of the oil marketing companies of India, due to which the companies are incurring a loss of Rs 20.4 per liter on diesel.
Oil tankers attacked in Red Sea, Houthis announce blockade
The main reason for this sudden rise in oil prices is the deteriorating environment of West Asia. With increasing tensions between America and Iran, this dispute has now spread to other parts of the Persian Gulf as well.
According to media reports, Yemen’s Houthi rebels have attacked Saudi Arabian oil tankers in the Red Sea. The attack comes just a day after the Houthi group announced a blockade on the Bab-el-Mandeb Strait, posing a serious threat to the global oil supply chain.
Shares of oil companies fell by 2.5%
The rise in crude oil prices has had a direct impact on India’s Oil Marketing Companies (OMCs)…
- Hindustan Petroleum (HPCL): The stock registered a decline of 2.50%.
- Indian Oil (IOCL): The stock fell by 2%.
- Bharat Petroleum (BPCL): A weakness of about 1% was seen in the stock.
India imports about 85% of its crude oil needs. Due to costlier crude, the country’s import bill increases, due to which there is a possibility of inflation rising and impacting the margins of companies.
There is a possibility of stagnation of LNG supply till October.
According to a Bloomberg report, Qatar Energy is preparing to extend ‘force majeure’ on the shipment of Liquefied Natural Gas (LNG) until mid-October.
In June itself, Qatar had informed some customers in Asia and Europe that cargoes for August and September would remain cancelled. If the ban extends into October, the global gas crisis could worsen before winter sets in as Europe and Asian countries compete for limited LNG supplies.
Sensex fell 364 points and Nifty 127 points.
Due to increase in the price of crude oil, there has been huge selling pressure on the Indian stock market. On July 23, the Sensex closed at 76,391 with a fall of 364 points. Nifty also fell by 127 points, closing at 23,870. There was heavy selling in realty, energy and banking shares.
Petrol and diesel prices increased in May
In May, IOC, BPCL and HPCL had increased the prices of both petrol and diesel by ₹7.50-₹7.50 per liter in tranches, citing expensive international crude prices. These three government companies control more than 90% of the more than 1 lakh petrol pumps in the country.
What next?
If this standoff in West Asia prolongs, crude oil prices may cross the $100 per barrel mark. Due to this, the Indian stock market, especially the shares of banking, auto and paint companies, are likely to continue to fluctuate in the coming days.
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