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Oil prices have surged sharply in recent days, with some analysts warning that Brent crude could climb to $150 per barrel if the Strait of Hormuz remains closed for a prolonged period amid the escalating Iran–Israel conflict. After a sharp selloff last week, Indian equities may face further valuation pressure in the near term due to heightened volatility, analysts said.

Crude oil prices crossed the key psychological mark of $100 per barrel last week, the first time since Russia’s invasion of Ukraine in 2022. Despite attempts by the US administration to reassure markets, the conflict in the oil-rich Middle East continues to intensify.

Iran has warned that oil prices could surge to as high as $200 per barrel if the conflict escalates further. Mojtaba Khamenei, Iran’s new supreme leader and son of Ayatollah Ali Khamenei, described the Strait of Hormuz as a strategic “tool of pressure” that must remain shut during the conflict. In a message aired on state television, he also warned that US military bases across the region could face attacks as Iran seeks retaliation for casualties from the conflict.

Oil prices have risen amid growing expectations that the Strait of Hormuz may remain shut, disrupting global energy trade. The narrow 33-km waterway connecting the Persian Gulf and the Gulf of Oman carries more than 20% of the world’s oil and gas shipments, making it one of the most critical chokepoints in global energy markets.

What lies ahead for oil prices

Global crude oil prices could rise to $120 per barrel in the near term and potentially reach $150 per barrel if the war continues for over a month and geopolitical tensions remain elevated in West Asia, said Kayanat Chainwala, Assistant Vice President at Kotak Securities.

“Any prolonged disruption to this trade route will be bullish for crude oil and negative for other commodities, as it fuels inflation concerns and could delay interest rate cuts,” Chainwala said.
A report by Nuvama also noted that crude prices could climb to $150 per barrel if the Strait of Hormuz remains closed for four to eight weeks. However, such extreme price levels could eventually lead to demand destruction and trigger alternative supply responses.The report added that Asian economies are likely to bear the brunt of the disruption, as nearly 13 million barrels per day (mbpd) of oil shipments to countries including China, India, Japan and South Korea pass through the Strait of Hormuz.

Meanwhile, Systematix Institutional Equities said global crude markets have entered a phase of heightened volatility over the past two weeks, driven by the destruction of oil and gas assets in West Asia, which has added a strong geopolitical risk premium to prices.

“Tanker freight rates and insurance premiums for vessels passing through high-risk zones have also surged, significantly raising procurement costs,” the brokerage said.

How Indian stock markets may react

The Nifty 50 fell 5.3% last week as the Iran–Israel conflict, a weakening rupee, persistent FII outflows and concerns over fuel supply weighed on sentiment. While Systematix expects near-term volatility to impact valuations, it continues to prefer Reliance Industries, Petronet LNG, Deep Industries and Gulf Oil as long-term bets.

According to Vinod Nair, Head of Research at Geojit Investments, market direction in the coming weeks will largely depend on developments in the Iran conflict and the trajectory of crude prices, given their implications for inflation, corporate margins, the current account deficit and RBI policy flexibility.

“A firm dollar and higher US bond yields may keep FIIs selective and volatility elevated. Selective value opportunities may emerge in fundamentally resilient and domestically driven sectors, while energy-sensitive segments could remain under pressure if crude prices stay elevated,” he said.

He added that domestic institutional buying has provided some cushion, but a sustained market recovery would likely require clear signs of geopolitical de-escalation, stabilisation in crude prices and improved clarity on fuel supply dynamics.

Siddhartha Khemka, Head of Research – Wealth Management at Motilal Oswal Financial Services, said market volatility is likely to persist as geopolitical tensions disrupt the energy market and keep risk sentiment fragile.

“Indian equities have seen a sharp correction in 2026 amid heightened global uncertainty, resulting in significant erosion of market value across segments,” Khemka said.

The Nifty 50 has declined over 11% so far this year, while the Nifty Midcap and Smallcap indices are down around 10% each. In March alone, the Nifty has fallen about 8%, marking its steepest monthly decline since the pandemic-driven crash of March 2020.

On the currency front, the Indian rupee recently hit a record low of Rs 92.45 against the US dollar as rising energy prices and risk-off sentiment heightened concerns about India’s current account deficit, given the country imports nearly 88% of its crude oil requirements.

Elevated oil prices have also intensified concerns around inflationary pressures, widening external balances and pressure on corporate margins, prompting investors to trim equity exposure and shift towards safer assets.

“Rate-sensitive and cyclical sectors such as banking, financial services and automobiles have seen notable selling pressure,” Khemka added.

Looking ahead, markets are expected to remain highly sensitive to developments in the West Asia conflict, movements in crude oil prices and trends in foreign fund flows.

“Persistent foreign outflows and elevated oil prices could keep sentiment cautious, while any signs of easing geopolitical tensions may provide relief to markets,” he said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

The conflict in the Middle East has disrupted international flights, causing a growing backlog of stranded travelers, especially in Thailand, with over 400 affected flights. Globally, around 20,000 flights have been canceled, impacting 400,000 passengers. Limited airline communication and regional route disruptions may take weeks to resolve, threatening future tourism.

Unintended Extended Stay for Travelers

Sam and Mark initially planned a brief escape from the British winter to Southeast Asia. However, their trip has been thrown into chaos after their flight through Doha was canceled, and no clear date for a new flight has been provided. Their frustrations highlight poor communication and a perceived lack of contingency planning from airlines, complicating their situation as they attempt to return home. Globally, around 20,000 flights have been canceled recently, stranding over 400,000 travelers amid the ongoing war in Iran, which has unexpectedly disrupted travel plans.

Widespread Disruption and Misinformation

Passengers stranded in transit hubs like Bangkok’s Suvarnabhumi Airport turn to social media amid scarce official information. Misinformation circulates quickly, with rumors about departing flights and easing restrictions, but many transit flights remain canceled. Some efforts by the Thai government include financial assistance and visa extensions, yet strict eligibility requirements and limited capacity mean only a few will benefit. Officials warn that clearing the backlog may take up to a month, prolonging travelers’ extended stays.

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The Impact on Tourism and Future Travel

The ongoing cancellations not only frustrate stranded passengers but also threaten Thailand’s tourism industry. As travelers look ahead to summer holidays in Southeast Asia, many may prefer alternative routes, avoiding traveling through the Middle East due to current disruptions. The situation underscores the broader consequences of the geopolitical conflict, affecting both individual travelers and destination economies, with recovery likely to be slow and challenging.

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Other People are Reading

India’s defence sector is entering a new phase of expansion as geopolitical tensions, government procurement initiatives and a strong push for domestic manufacturing reshape the industry’s growth outlook. Rising global security concerns—particularly in regions such as the Middle East—are prompting nations to increase military spending, which in turn is creating opportunities for defence equipment manufacturers worldwide.

For India, this shift coincides with a policy framework that prioritizes self-reliance in defence production. The government’s continued emphasis on indigenisation, alongside initiatives aimed at strengthening domestic manufacturing capabilities, is expanding the sector’s addressable market. Increasing participation from private industry, start-ups and MSMEs is also improving the depth of the domestic defence ecosystem while encouraging innovation and cost efficiency across projects.

A key driver of sector growth is the steady pipeline of procurement programs and capital acquisition approvals across the armed forces. Recent approvals of large defence acquisition proposals underscore the government’s ongoing commitment to modernizing military capabilities and enhancing operational readiness. Such approvals not only support order inflows but also provide greater revenue visibility for the sector over the medium term.

Export opportunities are emerging as another significant catalyst. With several countries increasing defence spending and seeking diversified supply sources, Indian manufacturers are gradually expanding their presence in global markets. The Middle East already accounts for a significant share of global arms imports, and continued demand for equipment such as missiles, air-defence systems, surveillance technologies and electronic warfare solutions could open new avenues for Indian defence exporters.

At the same time, the sector continues to face certain operational challenges. Supply-chain constraints—particularly for specialized components and imported subsystems—could occasionally affect production schedules or execution timelines for complex defence platforms. Addressing these bottlenecks through greater localization and technology development remains a key priority for policymakers and industry participants alike.

Despite these near-term constraints, the broader outlook for the defence industry remains positive. Increasing budget allocations, emergency procurement programs and technology-focused development roadmaps are likely to sustain order inflows and improve long-term revenue visibility for sector participants.
Taken together, rising defence spending, a robust procurement pipeline and growing export opportunities suggest that India’s defence sector is transitioning into a structurally stronger growth phase. As indigenisation deepens and domestic capabilities expand across platforms—from electronics and missiles to aerospace systems—the sector appears well positioned to benefit from both domestic modernisation and global demand for defence equipment.

Bharat Electronics: Buy| Target Rs 520

Supported by a robust INR730b order book and sustained inflows, Bharat Electronics remains well placed to benefit from large platform programs across the Army, Navy, and Air Force. A strong addressable market underpins expectations of sustained revenue growth exceeding 15% over the coming years.
Strong execution drove revenues and margins above expectations, aided by disciplined cost control and operating leverage. Effective supply-chain management has insulated the company from semiconductor shortages and commodity volatility, while higher indigenisation levels continue to support better-than-expected profitability.

Looking ahead, Bharat Electronics is positioned to capitalise on sizable orders, including QRSAM, Akash-NG, next-generation corvettes, and base programs. Improved margins and healthy execution underpin management’s guidance, with revenue and PAT expected to grow at 18% and 16% CAGR over FY25–28.

Kirloskar Oil Engines: Buy| Target Rs 1600

Kirloskar Oil Engines continues to strengthen its market position across both low and high-horsepower power generation segments, supported by ongoing capability expansion and a consultant-led sales approach.

The company is witnessing improving order visibility driven by increasing opportunities in the nuclear and defence sectors, CPCB 4+ replacement demand, and growing export traction. The transfer of the B2C business enables a sharper focus on the higher-margin B2B portfolio.

In 3QFY26, revenue grew 35% YoY to INR13.8b, led by strong performance in the power generation and industrial segments. EBITDA margin stood at 12.2%, impacted sequentially by higher other expenses, while adjusted profit after tax was INR1,022m.

Over 9MFY26, revenue, EBITDA, and profit after tax recorded steady growth, reflecting healthy demand momentum and improving operating performance.

(The author Siddhartha Khemka, Head of Research – Wealth Management, Motilal Oswal Financial Services)

While traditional energy investors spent the past weekend counting down the minutes until futures markets reopened on Sunday, overseas crypto traders were already placing their bets on the direction of oil prices.

The cryptocurrency exchange Hyperliquid lists perpetual futures, a highly speculative flavor of derivatives, tracking West Texas Intermediate crude—the U.S. benchmark—and other commodities. And like other crypto-native contracts, perpetual futures trade 24/7.

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