Brent crude crosses $90/barrel mark due to US-Iran tensions:With 16% increase in a week oil causes inflation threat in India

Crude oil prices in the global market are witnessing a surge once again. Due to rising tensions between the US and Iran, Brent crude oil crossed $90 per barrel today. Rising oil prices have increased the risk of inflation and energy shock in India. This is likely to impact the Indian rupee and Foreign Portfolio Investment (FPI) flows. On the other hand, expensive crude oil has put heavy pressure on the retail fuel margins of India’s Oil Marketing Companies (OMCs), resulting in a loss of ₹20.4 per liter on diesel for companies. However, due to a significant jump in refining margins, the overall profits of companies are currently stable. 1. Brent Crude crosses $90, jumps 16% in a week In the international market, Brent crude futures rose by $2.69 (3.05%) to reach $90.79 per barrel, which is the highest level since June 11. In the past week, Brent crude has surged by 16%, which is the biggest single-week gain since April. Currently, Brent crude was trading at $88.43 per barrel and US WTI crude at $82.40 per barrel. Meanwhile, the Indian crude basket is trading at $81 per barrel. 2. Experts say – India faces threat of energy shock and rupee pressure V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said that the market faces several challenges in the near-term. The biggest pressure is Brent crude crossing $90 due to rising tensions between the US and Iran. If this trend continues, the threat of an energy shock in India will emerge again. This could have a direct negative impact on the rupee’s movement and FPI flow. Bank of Baroda has also warned in its report that rising crude oil prices have reignited ‘inflation concerns’ at the global level. 3. Interest rates may rise again in America: 52% probability of rate hike According to Bank of Baroda’s report, following the statement by the Cleveland Fed President, the probability of the US Federal Reserve raising interest rates in the September 2026 meeting has increased. 4. Volatility in US Stock Markets, Brake on 2000-Point Rally Devarsh Vakil, Head of Prime Research at HDFC Securities, stated that American markets witnessed significant volatility this week. According to Devarsh Vakil, new attacks in the US-Iran conflict, rotation in the tech sector, and inflation data pulled down major indices, breaking the mid-summer rally streak. Over the weekend, new attacks occurred between the US and Iran. Iran has stated that the ceasefire between both countries has completely ended, raising fears of supply disruptions in the world’s busiest maritime oil routes. 5. Oil Companies’ Petrol Margin Drops, ₹20 Per Litre Loss on Diesel According to Equity Securities’ weekly report, the surge in crude oil prices has significantly reduced the fuel retailing margins of India’s government oil marketing companies – BPCL, HPCL, IOCL. 6. Surge in Refining Spread: Diesel Crack Up 99% Providing Support Despite losses in retail margins, there has been a strong improvement in the refining business of oil companies, which has preserved the overall integrated profitability of the companies. 7. Refiners May Get Relief for 1-2 Quarters What are ‘Crack Spreads’ and ‘Integrated Margins’? Crack Spread: The difference between the price of crude oil and the market value of refined products made from it (such as petrol, diesel, ATF) is called ‘Crack Spread’. It represents the profit of refining companies. Integrated Margin: When an oil company’s refining margin (profit from processing crude oil) and marketing margin (profit/loss from selling petrol-diesel at petrol pumps) are both combined in a 1:1 ratio, it is called Integrated Margin.