Global oil markets brace for further weakness towards year-end amid easing geopolitical uncertainties: Market experts

Global crude oil prices are likely to remain under pressure towards the end of the year amid easing geopolitical tensions in West Asia and improving prospects for peace, a development that could provide relief to India's import bill, support the rupee and improve sentiment in domestic equity markets, market experts said.

Global crude oil prices are likely to remain under pressure towards the end of the year amid easing geopolitical tensions in West Asia and improving prospects for peace, a development that could provide relief to India's import bill, support the rupee and improve sentiment in domestic equity markets, market experts said. “If West Asian tensions continue to cool, crude may move towards USD 75 per barrel by December 2026. In this supportive scenario, equities could scale new highs, while the rupee may strengthen towards 90 per US dollar,” SP Sharma, Chief Economist, ASSOCHAM, told ANI.

Sharma said West Texas Intermediate (WTI) crude oil was currently trading at around USD 87 per barrel in the global market. He said India's economic fundamentals remained resilient despite the pressure exerted by the crude oil shock on the rupee and inflation. He noted that the economy was expanding at over 7 per cent, exports were registering strong growth, manufacturing activity was advancing at a double-digit pace, and agriculture continued to provide support.

He added that the services sector remained a dependable growth engine, reinforcing India's economic resilience. According to Sharma, improving prospects for peace in West Asia, supported by developments involving the United States, had strengthened hopes of easing geopolitical risks.

He said moderation in international crude prices, alongside robust domestic fundamentals and renewed foreign capital inflows, could support a recovery in the currency and equity markets. Providing a technical assessment of the crude oil market, Riteshkumar Sahu, Senior Manager-Commodities Research, Kotak Neo, said crude prices were expected to remain bearish over the next couple of months, although their trajectory would largely depend on geopolitical developments and headlines.

“Crude oil is mostly geopolitical and headlines dependent. It is stuck between 103 and 84,” Sahu said. Explaining the technical outlook, he said Brent crude was in a downtrend after breaking its earlier uptrend line and was consolidating between USD 84 and USD 103 per barrel.

“As long as it holds above 84, it can bounce back towards 90 and then 102.50. If it closes below 84, the chart opens up the next downside targets at 78 and then 71.8,” he said. The technical assessment indicates that a sustained close below USD 84 per barrel could open the way for further declines, while crude could recover towards USD 90 and USD 102.50 if it continues to hold above that level.

Meanwhile, Ajay Srivastava, Founder of the Global Trade Research Initiative (GTRI), attributed the recent decline in crude oil prices to geopolitical developments that have eased fears of fresh strikes on Iran. According to the GTRI analysis, Brent crude fell to USD 90 per barrel on November 10, down around 24 per cent from its October 30 level of USD 118 per barrel.

Srivastava's analysis said lower crude prices could reduce India's oil import bill and demand for US dollars for energy payments, thereby easing pressure on the rupee. A recovery in Gulf crude oil, liquefied petroleum gas (LPG) and liquefied natural gas (LNG) shipments through the Strait of Hormuz and Red Sea routes via Bab el-Mandeb could provide further relief.

The GTRI analysis also highlighted the sell-off in US technology and artificial intelligence stocks, which wiped out an estimated USD 2.5 trillion in Nasdaq market value on November 5, as a possible factor behind renewed interest in Indian equities. Foreign portfolio investors (FPIs), after recording net sales of Rs 34,843 crore in October, turned net buyers, purchasing Indian equities worth Rs 53,739 crore between November 2 and 9, according to the analysis.

Srivastava's assessment suggested that continued foreign equity inflows and lower crude prices could help stabilise the rupee. Overall, easing geopolitical tensions and improving prospects for peace in West Asia could keep crude oil prices under pressure towards year-end, although their trajectory will remain sensitive to geopolitical developments and potential supply disruptions. (ANI)