Oil Prices Above USD 108 Raise Concerns Over Rupee, Inflation, Margins; Experts See Risk-Off Start

New Delhi, Sept 14: Surging crude oil prices above USD 108 a barrel amid continued disruption in shipping through the Strait of Hormuz are expected to weigh on Indian markets, with analysts warning of pressure on the rupee, inflation, corporate margins and equity valuations.

Brent crude rose more than 3 per cent to around USD 108 a barrel on Monday as prolonged disruption in the Strait of Hormuz heightened concerns over global energy supplies. US stock futures also weakened, with S&P 500 futures down slightly more than 0.5 per cent ahead of the resumption of US trading.

At the time of reporting, Brent crude was trading at around USD 107.64 per barrel, while crude oil was at around USD 103.30 per barrel.

Market analyst Vipin Dixena said Indian markets could begin Tuesday with a clear “risk-off” bias as Brent moved above USD 108 and Asian equities came under pressure.

According to Dixena, the bigger concern for India is not the immediate 3 per cent rise in crude but whether prices remain above USD 100 for an extended period, which could pressure the rupee, inflation expectations and corporate margins, particularly in oil-importing sectors.

He expected weakness in rate-sensitive and consumption-oriented stocks, while energy-related shares could remain relatively resilient.

Manoranjan Sharma, Chief Economist, Infomerics Valuation and Rating Limited, also described the immediate market reaction as “risk-off”, saying Brent at USD 108 was negative for India, though the impact would depend on whether the spike was temporary or sustained and whether it disrupted physical supplies.

India imported 88.6 per cent of its crude requirement during April-January FY26, leaving the economy vulnerable to a higher dollar oil bill, Sharma said.

Higher crude prices could squeeze margins in airlines, paints, chemicals, logistics, cement, consumer companies and downstream oil marketers if retail fuel prices remain controlled. They could also delay earnings recovery, raise bond yields, weaken the rupee and trigger foreign portfolio outflows, reducing valuation multiples, he said.

Sharma, however, noted that relatively low inflation, a current account deficit of 0.8 per cent of GDP in H1 FY26 and substantial foreign exchange reserves provide some cushion.

But if crude stays above USD 100 for several months or shipping through West Asia remains disrupted, the growth-inflation trade-off could worsen significantly, he cautioned. (Agencies)