Oil prices above $75/bbl as Israel-Iran conflict intensifies
New Delhi: Crude oil prices edged higher early Monday as tensions escalated between Israel and Iran, with both countries targeting each other's key energy infrastructure.
Over the weekend, Israel launched airstrikes on several oil and gas fields in Iran, including South Pars, one of the world's largest natural gas reserves. Despite the intensity of the attacks, reports indicated that there has been no immediate disruption to energy supplies.
Meanwhile, Iranian missile strikes on northern Israel reportedly caused localized damage to pipelines and transmission lines in the Bazan oil refinery complex near Haifa. While refining operations continue, other functions at the facility have been suspended, according to reports.
At 0755am, IST, the August contract of Brent crude on the Intercontinental Exchange was trading at $75.14 per barrel, up 1.24% from previous close. Immediately after Israel attacked Iran, oil prices shot up on Friday. Brent Crude, the global benchmark, had surged 8% to $74 per barrel.
Traders remain wary of further escalation, particularly any threat to the Strait of Hormuz—a critical chokepoint through which nearly 20% of the world's oil supply is transported.
S&P Global Commodity Insights said Israel's surprise airstrikes on Iranian nuclear sites have jolted global energy markets, sending oil prices higher and fuelling fears of broader regional instability. While the conflict is driving up oil and gas prices in the short term, S&P noted that sustained pressure is unlikely unless crude exports are directly impacted.
'If Iranian crude exports are disrupted, Chinese refiners—the primary buyers of Iranian oil—would be forced to seek alternatives from other Middle Eastern suppliers and Russia,' said Richard Joswick, head of near-term oil analysis at S&P Global. 'This could also lift freight rates and tanker insurance premiums, narrow the Brent-Dubai spread, and hurt refining margins, especially in Asia.'
According to the Platts OPEC Survey, Iran produced 3.25 million barrels per day (b/d) of crude in May. It also has around 2.2 million b/d of refining capacity and 600,000 b/d of condensate splitting capacity. However, crude exports slipped below 1.5 million b/d last month as floating storage levels rose amid rising geopolitical tensions.
India, which imports over 85% of its crude oil, does not purchase Iranian oil due to US sanctions. Nonetheless, any global supply disruption and price surge increases India's import bill, putting pressure on the rupee and trade balance.
JP Morgan recently projected that crude oil prices could surge to $120–130 per barrel if the conflict worsens.
'If prices climb to $120 per barrel, there will be pressure on the forex front and the trade balance due to a higher import bill. However, inflation may not be immediately impacted, as domestic fuel prices are unlikely to be raised in the short term, having remained static even during earlier price dips,' Madan Sabnavis, chief economist at Bank of Baroda, had told Mint earlier.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
11 minutes ago
- Mint
Shares nudge up, oil dips, with Mideast and central banks in focus
Oil dips after initial rise, Brent at $73.85 a barrel China retail data beat forecasts, factory output in line Asia, European shares and U.S. futures nudge up Busy central bank week ahead, eyes on Middle East Dollar steadies, gold dips (Updates after morning European trading) By Wayne Cole and Alun John SYDNEY/LONDON, June 16 (Reuters) - World shares nudged up on Monday, with oil prices steadier but holding on to most of last week's increase, as the conflict between Israel and Iran added further uncertainty to the world's economic troubles in a week packed with central bank meetings. The escalation in the Middle East came just as Group of Seven leaders were gathering in Canada, with U.S. President Donald Trump's tariffs already straining ties. Yet there was no sign of panic among investors as currency markets stayed calm and Wall Street stock futures firmed after an early dip. Brent was last off 0.5% at $73.85 a barrel,, but last week's 13% surge means its inflationary pulse, if sustained, could make the Federal Reserve more nervous about giving too many hints at its Wednesday meeting about interest rate cuts later in the year. Markets are still wagering on two easings by December, with a first move in September seen as most likely. "The key is how much flexibility the Fed thinks it has, we've been pleasantly surprised we've not yet seen in inflationary pass-through from the tariffs," said Ben Laidler, head of equity strategy at Bradesco BBI. "The situation in the Middle East is the major issue of the day. The message from the market is that it isn't too afraid, but it does turn what was already going to be a busy week into a frenetic one, and that has a lot of people on the sidelines." Data on U.S. retail sales on Tuesday will also be a hurdle, as a pullback in autos could drag the headline down even as core sales edge higher. A market holiday on Thursday means weekly jobless claims figures are out on Wednesday. For now, investors were waiting on developments and MSCI's all-country world share index gained 0.2%, to sit a touch below last week's record high. Europe's STOXX 600 rose 0.3% and S&P 500 futures rose 0.5%. Earlier in the day, Chinese blue chips added 0.24%, and Hong Kong gained 0.7% as data showed Chinese retail sales rose 6.4% in May to handily top forecasts, while industrial output was in line with expectations. In currency markets, the dollar gave back of some of last Friday's gains against European currencies - the euro was up 0.3% at $1.1582 - and held steady on the Japanese yen at 144.10. The spike in oil prices is a negative for the yen and euro at the margin as both Japan and the EU are major importers of energy, while the United States is an exporter. Currencies from oil exporters Norway and Canada both benefited, with the Norwegian crown hitting its highest since early 2023. "We should expect that economies with a positive energy trade balance should see their currencies benefiting from the shock to oil prices," noted analysts at Deutsche Bank. "It's notable the dollar is in this category, highlighting how the U.S. has moved from a net energy-importer to a net exporter in recent years." Central banks in Norway and Sweden meet this week, with the latter thought likely to trim rates. The Swiss National Bank meets on Thursday and is considered certain to cut by at least a quarter point to take rates to zero, with some chance it may go negative given the strength of the Swiss franc. The Bank of Japan holds a policy meeting on Tuesday and is widely expected to hold rates at 0.5%, while leaving open the possibility of tightening later in the year. There is also speculation it could consider slowing the rundown of its government bond holdings from next fiscal year. Government bond yields nudged higher around the world. The U.S. 10-year Treasury yield was last up 1 bp at 4.44% Germany's 10-year Bund yield was up nearly 3 bps at 2.56%. The calmer mood across markets saw some of gold's safe-haven bid reverse and it was down 0.55% at $3,413 an ounce.. (Reporting by Wayne Cole; Editing by Sam Holmes and Alex Richardson)
Mint
13 minutes ago
- Mint
Xi Pushes to Deepen Central Asia Influence With Kazakh Visit
(Bloomberg) -- Chinese President Xi Jinping has arrived in Kazakhstan for talks with Central Asian leaders, providing a counterpoint to a Group of Seven summit by visiting a vast region at the nexus of competing interests from Washington to Beijing. Xi, who's making only his third overseas trip this year, will meet with Kazakh President Kassym-Jomart Tokayev on Monday and attend the second gathering of the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan the following day. The summit in the Kazakh capital Astana is taking place in parallel to the G-7 event in Canada, and comes days after US Secretary of State Marco Rubio met Kazakhstan's foreign minister in Washington. Xi hosted the inaugural China-Central Asia Summit in the Chinese city of Xi'an two years ago. A key objective for Xi in Kazakhstan, where he launched the sprawling Belt and Road infrastructure initiative more than a decade ago, is 'future-proofing' China's economy for a potential rift with the US, according to Kate Mallinson, a partner at PRISM Strategic Intelligence Ltd. in London. 'China has come out of the last three years significantly stronger in Central Asia,' she said. 'Having observed the West's attempts to use its economic influence to isolate Russia since 2022, China continues to make efforts to safeguard its economy and supply chains against any future confrontation with the US.' US President Donald Trump's tariff war is likely to be high on the agenda as Xi cultivates alliances in Central Asia, where jockeying for resources and political influence has intensified between major powers. Italian Prime Minister Giorgia Meloni visited last month and European Commission President Ursula von der Leyen made a trip in April. The region, which is home to vast reserves of uranium and oil, as well as rare earth metals, has grown in importance for China, providing overland routes for exporting to Europe. At the same time, Russia's historical influence over the former Soviet republics has been undermined by President Vladimir Putin's war in Ukraine, now well into its fourth year, allowing China to ramp up exports to a region with a gross domestic product of about $500 billion. The Chinese leader is visiting Kazakhstan for the third time since 2020, making the country of 20 million people one of his favorite destinations in the years after Covid curtailed his global travels. Tokayev, who's been Kazakhstan's president since 2019, is a Mandarin speaker who once worked as a diplomat in China. His government has set the target of attracting $150 billion in investment by 2029, when Tokayev's term in office should come to an end. It's a goal that may require greater involvement from China, given Russia's diminishing role in the region. China has committed a total of $26 billion in capital, according to official Kazakh estimates, making it a top-5 investor behind the likes of the US and Switzerland. On Monday, Kazakh and Chinese firms signed deals worth over $24 billion at the Second Central Asia — China Industrial and Investment Cooperation Forum, the Kazakh Invest company said. 'China's development needs a thriving Central Asia,' Liu Jianchao, who heads the Communist Party's diplomatic arm, said in a speech in March. 'China welcomes Central Asian countries to take a free ride from China's growth and opening up.' China has sought to counter the US-led global order — a goal it shares with Russia — in part by courting the Global South. In recent months, Xi has attended summits with regional blocs, using meetings with countries from Latin America and Africa to push for closer ties. China has also used rival groups to the G-7, such as the BRICS club of nations, named after early members Brazil, Russia, India, China and South Africa, and to which Kazakhstan and Uzbekistan are partners. The group, which was considering a common currency, will meet in July. At a seminar in Shanghai this month, Chinese academics highlighted the significance of Beijing's cooperation with Central Asia in curbing ethnic conflicts and separatism, according to a state media report. China has meanwhile made economic inroads into Central Asia, increasing bilateral trade as well as expanding investment into areas ranging from energy to railways. Since 2023, China has outstripped Russia as Kazakhstan's largest trading partner. That's despite the fact that Central Asia's largest economy is, along with neighboring Kyrgyzstan, a member of a Moscow-led customs union. China's exports to the five Central Asian countries rose by more than 40% in both 2022 and 2023 as its firms, such as Huawei Technologies Co. and BYD Co., expanded market share. That growth slowed last year, but it was almost three times the level in the same period in 2021 — the year before the Ukraine invasion — through the first four months of 2025. More business deals will likely be on the table as the Chinese and Kazakh leaders meet. China's East Hope Group seeks to build an aluminum smelter capable of producing 1 million tons of the metal a year in Kazakhstan. It's part of a large industrial project with an estimated price tag of over $12 billion, according to the state-run Kazakh Invest company. Ahead of the meeting between Tokayev and Xi on Monday, Kazakh and Chinese companies signed 58 commercial agreements worth over $24 billion, according to Kazakh Invest. Development Bank of Kazakhstan secured a $1 billion credit line in dollars and yuan from China Development Bank. Kazakhstan's Deputy Foreign Minister Alibek Kuantyrov said in a statement that his country's 'partnership portfolio' with China includes 224 projects worth around $66.5 billion, which are expected to create about 50,000 jobs. 'Kazakhstan traditionally attaches great importance to the development of mutually beneficial cooperation with the Central Asian countries and the People's Republic of China,' he said. --With assistance from James Mayger, Colum Murphy and Jing Li. (Updates with signing of investment deals in the 12th paragraph.) More stories like this are available on
India Gazette
15 minutes ago
- India Gazette
Any escalation in Middle-East crisis or sharp rise in crude prices will impact India's Oil Marketing Companies: Report
New Delhi [India], June 16 (ANI): Any further escalation in the Middle-East crisis or a sharp rise in crude prices could pose a serious risk to earnings, especially for Indian Oil Marketing Companies (OMCs) and gas companies. However, Indian OMCs and gas companies are currently facing mixed impacts from the ongoing volatility in crude oil prices. According to a report by ICICI Securities, even with crude currently trading at USD 73-74 per barrel, there is already a material impact on the earnings of oil marketing companies (OMCs), while upstream companies could see some upside. The report stated, 'We estimate a material impact on OMC earnings and upside risk to upstream earnings even with crude at USD 73-74/bbl as is the case now'. It also noted that any further spikes in crude prices are unlikely to significantly boost upstream company earnings but could negatively affect OMCs and gas companies. This is because the price of LNG, which is linked to crude, will also rise steadily, increasing input costs for gas utilities. Despite these developments, the report stated that analysts of crude have not made any changes to their estimates or views for now. They plan to monitor the crude oil markets closely over the next few weeks before taking a more definitive stance on the oil and gas coverage universe. The report highlighted that the current rebound in crude prices remains lower than the average crude prices recorded in FY25 and well below the last four-year average. As a result, the overall impact on the profitability of Indian oil and gas companies is not considered unreasonable at this stage. However, the report acknowledges the sharp movements in stock prices of energy companies, reflecting market concerns about the Middle East situation. A major concern is the potential disruption of oil and gas shipments through the strategic Strait of Hormuz. There is also some fear, although remote, that NATO could be drawn into the conflict if Iran targets any Western military bases in the region. Currently, Brent crude is priced around USD 75 per barrel, which is about USD 6-7 per barrel higher than the analysts' FY26 estimate of USD 68. As per the report, this presents a downside risk to earnings per share (EPS) estimates for OMCs, while upstream companies may benefit. Still, crude prices remain USD 9 below the average of FY22-25 and USD 4 below the FY25 average, indicating that supply remains adequate and demand concerns continue to weigh on the market. For now, the report maintained the estimates but warned that any further escalation in the conflict or a sharp rise in prices could pose a serious risk to earnings, especially for OMCs and gas companies. (ANI)
