WTI Crude surged more than 3% to reach $85.75 per barrel, while Brent Crude climbed 3% to surpass $90 per barrel.
A spike of more than 3 percent occurred in Brent crude as worries about the conflict in the Middle East grew. Articles in the media mentioned explosions in Iraq, Syria, and Iran.
Tensions were rising as traders awaited Israel’s response to Iran’s latest attack. Unconfirmed strikes could indicate greater supply risks, analysts cautioned, which would cause the market to factor in a higher risk premium.
Reports surfaced shortly after Iran launched a massive aerial assault on Israel on April 19, deploying 300 missiles and drones in the process. This was Israel’s retaliatory strike on an Iranian site. There have been explosions in the vicinity of an Iranian army air base and Isfahan’s airport, causing flights across multiple Iranian airports to be suspended.
Fears in the market about possible Israeli retaliation drove up oil prices from three-week lows, with Brent Crude rising three percent to exceed $90 per barrel and WTI Crude rising more than three percent to $85.75 per barrel.
The medium-to short-term outlook for oil prices is impacted by geopolitical challenges and the ongoing conflict in the Middle East. Since these problems have the potential to affect sentiment and cause supply disruptions, we must keep an eye on how they develop in the upcoming weeks. Long-term outlooks for oil prices seem bleak, despite the fact that immediate consequences are noteworthy,” Wealthmills Securities’ Kranthi Bathini stated.
As of yesterday afternoon, according to analysts, market trends have shifted negatively. Markets consolidated in the afternoon despite the morning’s positive trend. With the Nifty trading around 22,000, oil prices are predicted to have a negative effect on Indian markets. Noting that earnings season is critical, we’ll need to watch how the market responds to Infosys’ results.
After the recent correction, oil is predicted to hold support at $82 per barrel with potential to rise above $90, according to Indiacharts founder Rohit Srivastava. This is being fueled by a number of factors, including rising demand, decreased interest rates, and geopolitical tensions. Growing oil costs will have an additional effect on inflation and bond yields, which will affect investor concerns. Even though oil has a big impact on market opening, investor sentiment is also influenced by Infosys news. The dynamics of the IT sector might influence immediate responses, but the effects of oil might take longer to manifest.
“There is 21,970 in immediate support. On April 18, that particular level was reached. We’ll be keeping an eye on that today, whether it holds true or not. should it hold, there may be a chance for a brief upswing. What I mean by a short-term bounce is that it occurs even during a longer downtrend. But we do anticipate that you will eventually take 21,970, and in the upcoming weeks, you should aim for 21,100–21,200, added Shrivastava.
Due to OPEC+ supply cuts and growing hostilities in the Middle East, which contribute significantly to global crude production, crude prices have increased year to date. Central bankers may face difficulties if energy prices remain high for an extended period of time.
According to Mehta Equities’ Prashanth Tapse, the markets were expecting the escalation to intensify the standoff in the Middle East. The Nifty’s immediate downside risk is seen at the 21,710 mark; any close below this could, albeit unlikely, cause a decline to levels around 21,500. The heads of Israel and Iran would keep the markets extremely volatile, but India can be a good buy on dips at 21,700 levels.
In this case, gold and crude prices would continue to rise, which would keep short-term pressure on stocks. We continue to be positive about India as we anticipate that this geopolitical crisis will soon come to an end. We are currently experiencing a strong earning season, which is what drives market trends. Before making any aggressive trades, we advise investors and traders to remain cautious. According to Tapse, a significant breakdown and level of pressure will occur if the Nifty falls below 21,600.