Closely watched by the world for any escalation, the Iran Israel conflict is already showing early signs of stress for India Inc.- longer deliveries, doubling freight rates, extended working capital cycles, and higher costs.
For those yet to feel the heat, there is growing apprehension and nervousness over future developments, observed industry executives.
Akin to any geopolitical tension, oil prices and related escalation in fuel costs are immediate concerns for both the Indian government and industry watchers. Oil and liquefied natural gas (LNG) prices are likely to shoot up if Iran blocks the Strait of Hormuz, through which countries like India import crude oil from Saudi Arabia, Iraq, and the United Arab Emirates, leading to a spike in inflation, analysts said on the Iran-Israel conflict.
The conflict has escalated over the past few days. Iran first launched drone and rocket attacks on Israel, which retaliated by firing a missile.
Crude oil prices have hovered around $90 per barrel since the conflict.
In a note, Motilal Oswal Financial Services said that while de-escalation efforts will likely control the crisis, oil, and LNG prices will spike in case Iran completely or partially blocks the Strait of Hormuz.
"We have maintained that prices crossing $100 per barrel would lead a very difficult situation.
Whatever price shocks may occur, it seems there remains enough buffer before that is reached," said a top Ministry of Petroleum and Natural Gas official. The events have made trade more uncertain, raising average prices of spot purchases, the official said.
Ministry sources said that while the hostilities between Israel and Iran are not expected to affect oil flows directly, the government remains concerned about the cascading impact on global prices and incremental effects. Brent crude on April 19 closed at $87.39 per barrel.
Bu hikaye Business Standard dergisinin April 22, 2024 sayısından alınmıştır.
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Bu hikaye Business Standard dergisinin April 22, 2024 sayısından alınmıştır.
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