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Arabian Post
a day ago
- Business
- Arabian Post
Citi Warns Hormuz Closure Could Propel Oil Near $90
Arabian Post Staff -Dubai Citigroup analysts warn that a shutdown of the Strait of Hormuz could lift Brent crude prices to approximately $90 a barrel, although they expect any halt to shipping to be brief. They cite the strategic importance of the strait—through which nearly 20 million barrels per day flow—suggesting market reaction would be sharp but short-lived as global efforts would swiftly aim to reopen the passage. Citigroup's forecast is embedded in a wider reassessment of global oil dynamics amid escalating Middle East tensions, particularly stemming from the Israel‑Iran conflict. With around 3 million barrels per day of output at potential risk and Iran among OPEC's top producers, disruptions—even temporary—could reverberate across the energy market. Citi's base-case scenario projects Brent at $75–78 per barrel if approximately 1.1 million barrels daily of Iranian exports are affected. ADVERTISEMENT A total 3 million bpd disruption, sustained over months, could even hit the $90 mark, Citi warns. Still, analysts emphasise that broader supply resilience, including increased output from non‑OPEC producers and reduced demand growth—due in part to slowing Chinese purchases—might temper a sustained rally. Other leading financial institutions draw a similar line: Goldman Sachs and Barclays point to heightened geopolitical risk premiums, respectively estimating $10 and $15–20 per barrel add-ons if Iran's exports are severely cut—a situation that could push prices above $100 in extreme scenarios. JPMorgan outlines a worst-case blockade of the Hormuz strait leading to a $120‑130 spike, though such events would likely be fleeting. Analysts and experts stress that while short-term oil supply disruptions would sharply affect spot prices, structural market factors could offset prolonged volatility. OPEC has spare capacity; U.S. shale output remains nimble; and China has begun trimming its purchases as inventories fill, helping absorb supply shocks. Geosphere Capital's Arvind Sanger assesses a 25 percent likelihood of an actual tactical attack on critical infrastructure such as Kharg Island or Hormuz, but holds that there is a 75 percent chance hostilities do not directly impact supply chains. Shipping insurance and risk premiums are rising, though long‑term disruption remains unlikely. Diplomatic signals, particularly from Washington playing a stabilising role in response to Iranian threats, may also help contain risks. Historical precedent—such as Rapid US naval deployments near the strait in 2008—reinforces the view that any attempt to close Hormuz by Tehran would quickly provoke international counter‑measures. Market movements reflect this delicate balance. Brent futures recently climbed above $78 before easing to the low‑to mid‑$70s, as traders weighed the potential for escalation against buffer capacity and broader production trends. Estimates from Rystad Energy suggest oil will likely remain capped below $80 unless dramatic escalation occurs—a view echoed by Midland Reporter‑Telegram coverage. Citi's note, authored by Anthony Yuen and Eric Lee, highlights that even though Hormuz closure would trigger a pronounced price spike, global strategic response and logistical imperatives would likely curtail its duration. They describe that, in their bullish scenario, 'any closure of the Strait could lead to a sharp price spike … but … it should not be a multi‑month closure.' Investors are advised to monitor diplomatic channels, oil inventories, and production shifts in Saudi Arabia, UAE and the US. While a temporary supply squeeze may lift prices—potentially to the $90 level—structural growth in non‑OPEC output and strategic reserves may prevent a prolonged energy shock.
Economic Times
05-05-2025
- Business
- Economic Times
Can't call the bottom in this market; it's a buy-on-dip rather than sell-on-rise market: Abhay Agarwal
Live Events You Might Also Like: Buy on dips instead of selling on rallies now; PSUs remain bull market leaders: Dharmesh Shah You Might Also Like: Will the party continue in the Indian market? Arvind Sanger answers You Might Also Like: US dollar declining, global markets decoupling from the US market: Rupen Rajguru (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel , Founder & MD,, says his advice to investors and own strategy is to drip money in because it is very difficult to call the bottom in this market. Rather than going all in, we should figure out what you want to invest in and keep investing in it over the next two to three months in a systematic manner. So, to answer your question, yes, we are definitely looking at this as a buy-on-dip market rather than a sell-on-rise market has been changing its texture. If you go back over the last six months. Around November, December was the time that it stopped being a buy-on-dips market and started converting itself into a sell-on-rise market and it stayed there till March when the FPI selling was peaking out. But what we are seeing now is that there is more confidence that the domestic consumption in India that had fallen off the cliff in the December quarter is now coming back, driven by lower interest rates, more liquidity in the system and better consumer a result, after earnings downgrading over the last two quarters, this quarter the commentary is better and more positive. This is giving the investors the confidence that the earnings growth has probably bottomed out and will revert to a mean of 10% to 15% for the next three to five years. That is the belief with which long-term investors are willing to make their bet in the the same time, there is this overarching fear of geopolitical tensions and something happening at any point of time which is the reason that domestic investors are not fully in. So, I see a dichotomy here from the last quarter that the foreign investors are now continuously looking for opportunities in India whereas the domestic investors are more cautious. My personal view is that the valuations are reasonable. There are growth opportunities . There are good growth sectors that are turning around from cyclical bottoms that will reward investors who are patient and not worried about daily volatility or weekly the same time, our advice to investors is and our own strategy is to drip the money in the markets because it is very difficult to call the bottom in this market. So rather than going all in, figure out what you want to invest in and then keep investing in it over the next two to three months in a systematic manner. So, to answer your question, yes, we are definitely looking at this as a buy-on-dip market rather than a sell-on-rise sector that we have been tracking and which we believe has already made or is in the midst of making a cyclical bottom is the entire small finance bank and lenders who do unsecured lending and also the larger banks. Frankly, that whole segment of banking and financials, NBFCs that lend to the middle to bottom of the pyramid, have a very solid branch network, branch presence, and the ability to generate deposits. This whole sector got beaten down over the last quarter largely because of very aggressive guardrails put in by RBI which led to lesser liquidity in the system, lesser money flow to them and everybody just focused on collections rather than increasing the book in the current construct, it looks like RBI has now come to a conclusion. The recent steps that they have taken show that they want to put back more liquidity in the system. They do not want to starve the entire bottom of the pyramid borrowers from credit. It is very essential that that sector that is largely self-employed continues to have access to credit. So, through credit guarantee schemes under which money is flowing to even microfinance lenders, there is optimism that that sector has kind of bottomed are of the view that this is a good time for investors to look at these smaller banks and NBFCs that are trading at either one-time book value and some even below that, but you will need to be able to take a two- to three-year perspective to make pretty good returns because this sector is a cyclical sector. We have seen the last three cycles, it bottoms out and then again aggressive lending takes place and when the valuations rise. So, this is one sector that we are quite bullish second sector is the entire pharma space for us. Again, it has not bottomed out, it has been the best performing sector, so not really a sector that we are saying has bottomed down cyclically but we believe that this is a sector that lot of hard work has been done in terms of creating a very solid product pipeline for exports to US market there is a very positive demand environment in the US for Indian companies, and a very friendly US FDA after a long period of time. All systems go for Indian pharma companies that are exporting to the US. So, these are two sectors we are pretty positive whole objective of the tariff realignment by the US government, the US president was not to create chaos in the global trade but to signal to the rest of the world that they cannot use the US as a dumping ground for their products and build on the other side tariff structures for inbound imports into their own country from the long as that problem is largely solved, the US tariffs are not going to hurt anybody in the medium to long term. There is a lot there and there are aggressive posturing and then there are back steps taken to make sure that nothing goes out of whack for the US customers. India especially has been a smaller trade partner for the US. I mean what we export to the US does not really hurt us. It is textiles. It is some bit of chemicals and gems and jewellery and services is one of the big we import from the US are automobile parts components, electronics, semiconductors, and higher technology items, electronics being top of that. It is a trade structure where it is easy for both the countries to come to terms and my personal view is that India will benefit from this kind of tariff structure, especially for textile exports and chemical exports. There were other countries that had more favourable tariff structures to the US and Europe and if India realigns, it is a golden opportunity for Indian exporters and the Indian government to benefit from the new tariff structure and generate higher trade activity with the US.
Time of India
02-05-2025
- Business
- Time of India
Will the party continue in the Indian market? Arvind Sanger answers
Arvind Sanger , Founder, Geosphere Capital Management , says India is poised to finalize a trade deal with the US swiftly, potentially being the first. While recent March quarter figures weren't outstanding, improvements in incremental data could make India's FY26 growth narrative compelling. Despite near-term global trade war concerns, non-consensus moves in gold, US markets, or the dollar are possible, potentially impacting emerging markets and other outperforming regions like Europe and Japan. We will talk about autos and we will talk about EVs, but in general, April has been a good month for Indian markets. Will the party continue? Arvind Sanger: Obviously, things that went well for India in the trade war. India was seen as a winner. Secondly, the US dollar was weakening and investors were looking to diversify away from the US. Those were some very powerful trends that India benefited from. Now, if the US starts to sign deals with a number of countries and the market starts to stabilise, then maybe even the dollar starts to stabilise and the big kahuna is what is going to happen with China. Clearly, the signals from the Trump administration are very clear. The US wants to do a deal with China and China has been playing a little bit of a tough game as they are trying to get a favourable positioning pre-talks to be able to do a deal. But if May is the month where some kind of a China deal is struck with significant reduction in tariffs – even if they end up at 50% or whatever – then we could see at the margin both the dollar stabilise and maybe China benefit a little more. So, very short term, it could cause some money to flow in those two directions. But directionally, it is looking like India is going to get a deal done very quickly. It may even be the first one. That is nice, but that is not the real story. The real story is what is going on with the India growth story. Obviously, the March quarter numbers have not been stellar. But if we see incremental data at the margin starting to improve, then the India growth story for FY26 starts to look interesting and that is really going to be the determinant beyond the very near-term noise of global trade war as to how the Indian market does. Do you see a case where in the near term like a couple of months, maybe for a quarter or so, emerging markets could underperform and developed markets could come back because this whole script of why the US will not do well and why EMs should do well is becoming public knowledge now? Arvind Sanger: Yes, it has become a bit of a consensus trade. I do not know if it will last the anti-consensus trade, or whether that will last for a whole quarter, but it certainly could last for a month. It is often said that the maximum pain markets move in opposite directions to inflict pain and if the consensus is so widely in one direction, then it is quite likely that you could get a non-consensus move, a non-consensus selloff in gold, or a non-consensus rally in US markets, maybe even a non-consensus rally in dollar. Live Events You Might Also Like: Rs 37,600 crore in 11 days! FIIs are flooding Indian stocks with cash but will it last? Again, these are very short-term trends, but it would not surprise me that what has happened in the last few days in the US market continues for a bit and that does take some of the bloom off the emerging markets' frenzy and frankly even Europe and Japan have outperformed. So, we could see a bit of a non-consensus trade happen for a few weeks, but fundamentally long term it may be a different story. Near term, who knows? Your call is quite interesting that we could get a non-consensus move in US markets. The way the global setup is looking at this point in time, we are marred by volatility and you were also talking about how the market rally will now be determined going ahead. One key point to note is the way how the foreign investors are allocating their funds. There is too much uncertainty. There will be an economic impact as well and that money is now slowly once again trickling back into India and emerging markets. India was not that much of a preferred bet for them. But do you think now decisively that money will continue to come into India given the relentless FII buying over the last 10 odd days? Arvind Sanger: You have to step back a little bit and look at the length of these cycles. From the beginning of '99 through the end of 2007, Nifty was up like over 500%. The US market was up 50%. So, this is not new that you get this massive cycle. Look back at the data for that eight or nine years for the Indian market and the Chinese market did even better. So, EMs had a huge run in that period and the US market did nothing and it was not like the US economy was in the toilet or anything like that. These cycles went on for a long time and then in 2009, the US had the financial crisis. The US financial system had almost gone bankrupt and after eight or nine years of huge underperformance by the US, who would have said that for the next 15 years the US market would beat every other market in the world? So, these cycles last for a long time. But within those cycles, it is not a straight line. You will have months and quarters where you get counter cyclical moves. If you ask me to tell you whether the counter cyclical move would be short term or medium to long term, I would say medium to long term. I do not know if India will be the big winner or some other emerging market will be the big winner. When the US market moved up by the end of last year, 50% of the world's market cap was in the US market. That was the peak that we came last in 2000 and at the end of 2024. These cycles tend to have long legs for a long period of time and India and other emerging markets that do well in terms of economic performance are poised to benefit from funds flow redirecting to a more normal long-term cycle because these cycles turn and then they go for a long time. You Might Also Like: US dollar declining, global markets decoupling from the US market: Rupen Rajguru
