NEW DELHI, Sept 14: A surge of more than 3 per cent in crude oil prices amid continued disruptions in the Strait of Hormuz is expected to keep Indian markets in a “risk-off” mode, with analysts warning that a prolonged rise in oil prices could put pressure on the rupee, inflation, corporate margins and market valuations.
Brent crude climbed to around USD 108 a barrel on Monday as persistent disruptions to shipping through the Strait of Hormuz raised concerns over global energy supplies. US stock futures also edged lower, with S&P 500 futures declining by more than 0.5 per cent ahead of the resumption of trading.
At the time of reporting, Brent crude was trading at around USD 107.64 a barrel, while crude oil was quoted at around USD 103.30 a barrel.
Market analyst Vipin Dixena said the sharp rise in crude prices and pressure on Asian equities could weigh on Indian markets.
“With Brent crude moving above USD 108 and Asian equities coming under pressure, I would expect Indian markets to begin Tuesday with a clear risk-off bias,” he said.
Dixena said the key concern for India was not merely the 3 per cent rise in crude prices but whether oil remains above USD 100 a barrel for an extended period.
A sustained increase, he said, could put pressure on the rupee, inflation expectations and corporate margins, particularly in oil-importing sectors.
He also expected weakness in rate-sensitive and consumption-oriented stocks, while energy-related shares could remain relatively resilient.
Manoranjan Sharma, Chief Economist at Infomerics Valuation and Rating Limited, also described the immediate market reaction as “risk-off”.
“Brent at USD 108 a barrel is certainly negative for India, but its ultimate damage depends on whether the spike is brief or sustained and whether it disrupts physical supply,” Sharma said.
He noted that India imported 88.6 per cent of its crude oil requirement between April and January of FY26, leaving the economy vulnerable to a rising dollar oil bill.
According to Sharma, higher crude prices could squeeze margins in sectors such as aviation, paints, chemicals, logistics, cement and consumer goods, besides putting pressure on downstream oil marketing companies if retail fuel prices remain controlled.
A prolonged increase in oil prices could also delay an earnings recovery, push up bond yields, weaken the rupee and trigger foreign portfolio outflows, potentially putting pressure on market valuations, he said.
Sharma, however, pointed to relatively low inflation, a current account deficit of 0.8 per cent of GDP in the first half of FY26 and substantial foreign exchange reserves as buffers for the Indian economy.
He cautioned that if crude prices remain above USD 100 a barrel for several months, or if shipping through West Asia faces further disruption, the growth-inflation trade-off for India could worsen significantly.
