Crude Oil Price Surges to Near $107 per Barrel Amid West Asia Conflict
The price of Brent crude oil has risen to near $107 per barrel, up almost 2% on Tuesday, driven by concerns over supply disruptions in West Asia due to the US-Iran conflict. This comes as the US 10-year Treasury yield reached its highest level since 2007 at 5.25%, and the 30-year yield at 5.56%. The sharp rise in global bond yields has put pressure on Indian markets, with the Sensex falling by as much as 708 points to 72,064.
Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that the emerging US macro picture is one of high growth alongside high inflation, which may lead to another rate hike and push yields higher still. Higher US yields make dollar fixed income more attractive, raising global borrowing costs and potentially pulling foreign capital away from emerging markets like India.
The fiscal strain on India due to unpassed-through oil costs is a concern for the government, as it widens the budget deficit. This could weigh on India's GDP growth and corporate earnings estimates for FY27. Foreign portfolio investors have sold about Rs 20,695 crore of Indian stocks so far in September, turning sellers after two months of buying.