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Crude oil prices could rise to USD 150 per barrel in an extreme scenario if the ongoing geopolitical tensions persist, potentially prompting global intervention, according to Vandana Bharti, Research Head - Commodity, SMC Global Securities.
"After USD 130, USD 150, I think many political alliance, they will come forward and they will stop it... USD 150 is itself a very alarming situation and many things are happening... otherwise, it will be a mayhem," Bharti told ANI on Thursday. Currently, global oil markets face supply disruptions of around 10 million barrels per day, with shipments through the Strait of Hormuz under strain. Asia, which accounts for 58.8 per cent of the global population, is among the worst-affected regions due to its heavy reliance on imported crude, she added. Benchmark prices are already elevated, with WTI crude at USD 107-108 per barrel, Brent around USD 106, and Murban crude is above USD 113. Bharti noted that India's crude basket is "already near USD 150", compared with USD 70-75 at the start of the year, reflecting higher freight, insurance and supply costs. She said market positioning based on New York Mercantile Exchange (NYMEX) option data shows a significant build-up near the USD 120-150 levels, with some participants discussing the possibility of prices rising further if the conflict persists. "Market is talking about USD 150... but USD 150 is something like extreme volatile situation would be there," she said. When asked about the possibility of crude oil touching USD 200 per barrel because of the war in the Gulf countries, Bharti said she did not endorse that view as a base case and instead pointed to likely intervention before such levels are reached. Bharti said rising crude prices would begin to trigger policy responses even before extreme levels are reached. "USD 120, USD 130 will give pressure to Trump to go for a ceasefire," she said, adding that higher prices would intensify economic stress globally. She also pointed to domestic political pressure in the United States, noting that a prolonged price surge could force action ahead of mid-term elections. "He needs to go for a ceasefire before the mid-term election because it will hit the result," she said. At higher levels, coordinated global intervention is likely, she added. "Many countries, they will intervene... they will pressurize US to call for a ceasefire and all," she said, referring to potential action if crude prices rise toward USD 150. The economic consequences of rising crude prices are already visible. Bharti said every USD 10 increase in oil prices could reduce GDP growth by 0.5 percentage points (50 basis points), while prices above USD 120 could trigger stagflation, with growth slowing to around 0.9-1 per cent amid rising inflation. The situation is further constrained by limited buffers. The United States has indicated availability of about 400 million barrels from its Strategic Petroleum Reserve, which Bharti said would cover only around 20 days of supply linked to Hormuz disruptions. In India, domestic crude prices have surged sharply. MCX crude has risen from about Rs 6,000 before the conflict to above Rs 10,000, after touching a high of Rs 10,500, and could climb further to Rs 11,000-12,000, she said. The rupee, currently at around 93.11 per dollar, could weaken to 97-98 if global crude prices rise to the USD 120-130 range, increasing the current account deficit and imported inflation. Bharti also highlighted broader supply disruptions, noting that longer shipping routes via Africa have raised freight and insurance costs, while shortages are affecting multiple sectors, including helium supplies impacting MRI services. While alternatives such as renewable energy and coal gasification are being explored, she said they are not immediate solutions. "Renewable, it will take time... it will take decades," she said, adding that coal has often acted as a "saviour" during energy crises. Bharti said that although some countries, including India, continue to receive shipments, delays and payment challenges persist. She warned that if the crisis extends beyond April or May, the economic impact could intensify significantly, particularly with rising summer energy demand. "If it prolongs... then it will create a real havoc for Indian economy as well," she said. (ANI)
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