Business Desk – Brent Crude Near $100: Tension has once again started increasing between America and Iran and its direct effect is visible on the prices of crude oil in the global market. After the latest military attacks between the two countries, Brent crude oil has reached above $ 95 per barrel. Now the biggest concern in the market is that if the tension continues for a long time and the oil supply is affected, then crude oil may again cross 100 dollars.
How much did crude oil reach today?
On September 2, Brent crude reached around $95.4 per barrel. WTI crude was also trading at around $90.66 per barrel. Brent has reached a high of almost six weeks. The main reason for the rise in oil prices in the last few sessions is the increasing tension between America and Iran and the increasing concern over the supply of oil through the Strait of Hormuz.
Strait of Hormuz is very important for the oil market. About one-fifth of the world's seaborne oil trade passes through this route. In such a situation, if there is a major obstruction in the movement of ships, the supply of crude oil across the world may be affected.
Why did tension increase again between America and Iran?
America has launched new air strikes on Iranian targets. In response to this, missile and drone attacks were also carried out by Iran. In the latest conflict, concerns regarding maritime traffic and security around Hormuz have increased. According to reports, Iran's air defense, radar and maritime activities targets were targeted in the American strikes.
This tension has directly affected the oil market. Investors are worried that if the conflict escalates, the movement of oil tankers could be affected and the risk of supply disruption could increase. For this reason the risk premium in crude oil is increasing.
Why may problems increase for India?
India fulfills a major part of its requirement through import of crude oil. Therefore, the cost of oil in the international market impacts the country's import bill. If Brent crude continues to rise, India may have to spend more foreign exchange to buy oil.
Its effect is not limited to petrol and diesel only. Expensive crude i.e. pressure of increasing cost of petrol, diesel and other fuels. Due to this, transport costs may increase and if freight transportation becomes expensive, the prices of many everyday items may also be affected.
Expensive oil means inflationary pressure
Inflationary pressure may increase if crude oil prices remain high for a long time. Rising fuel and transportation costs increase costs for many sectors. Its impact can be seen from the margins of companies to the household budget of the common man.
This is why the world's eyes are now on the US-Iran tension and the situation in the Strait of Hormuz. If tension in the region subsides and oil supply remains normal then pressure on prices may reduce. But if the conflict prolongs and the supply is disrupted, then the risk of Brent Crude crossing $100 may increase again.
