Crude oil stays above $100: The market impact on India cannot be ignored

Crude oil prices remained elevated above $100 a barrel on Thursday amid continuing geopolitical tensions involving the US and Iran, while Indian benchmark indices opened largely flat as higher energy prices weighed on investor sentiment.

Brent crude, the global benchmark, traded around $101 a barrel, while West Texas Intermediate (WTI) was around $96 a barrel in Thursday trading.

On the Multi Commodity Exchange (MCX), September crude oil futures rose ₹35, or 0.38%, to ₹9,134 per barrel, with a business turnover of 3,190 lots.

Analysts attributed the increase in domestic futures to higher participation and increased bets by market participants.

Brent had surged 3.4% on Wednesday, briefly moving above $100 a barrel for the first time since July, before easing slightly in early Asian trading.

Strait of Hormuz remains a key concern

The rise in oil prices comes amid continuing attacks involving the US and Iran that have disrupted oil flows through the Strait of Hormuz, a critical route for global energy supplies.

The conflict has increased concerns about potential disruptions to crude supplies and pushed a geopolitical risk premium into energy prices.

US President Donald Trump has indicated that oil prices could remain elevated until after the US midterm elections, adding to uncertainty over how long the current pressure on energy markets could last.

Indian markets remain cautious

Indian equities opened largely flat on Thursday as investors assessed the impact of higher crude prices, geopolitical tensions and rising US Treasury yields.

The Sensex was marginally higher at around 74,810, while the Nifty 50 was near 23,439 in early trade.

Among Sensex companies, Tech Mahindra, Axis Bank, State Bank of India, Power Grid, ITC and Infosys were among the early gainers. Mahindra & Mahindra, Adani Ports, Reliance Industries, Sun Pharma, InterGlobe Aviation and Bharat Electronics were among the laggards.

Foreign institutional investors remained sellers, offloading equities worth ₹582.99 crore on Wednesday.

The previous session had been weak, with the Sensex falling 813.35 points, or 1.08%, while the Nifty declined 203.60 points, or 0.86%.

Why crude oil matters for India

India imports a large share of its crude oil requirements, making sustained increases in international oil prices important for the domestic economy.

Higher crude prices can increase the cost of imported energy, put pressure on the trade balance and affect companies exposed to fuel and transportation costs. They can also complicate the inflation outlook if higher energy and logistics costs feed into the prices of goods and services.

For investors, the combination of expensive crude, geopolitical uncertainty and higher US bond yields can reduce risk appetite towards emerging markets such as India.

US inflation data in focus

Markets are also awaiting fresh US inflation data for clues about the Federal Reserve's monetary-policy path.

The Producer Price Index (PPI) for August is due first, followed by the Consumer Price Index (CPI). Investors will assess whether persistent inflationary pressure could affect expectations around future US interest-rate decisions.

The key market question is whether oil prices above $100 remain a temporary geopolitical shock or develop into a prolonged supply-side problem. A sustained disruption around the Strait of Hormuz could keep energy prices elevated and increase inflationary pressure globally. For India, prolonged high crude prices could create additional pressure on import costs and corporate margins while making the inflation and interest-rate outlook more complicated. The direction of oil prices will therefore remain closely linked to developments involving the US and Iran, alongside upcoming US inflation data.