A Relief That Market Is Not Hitting Panic Button On Crude Movement, Says Vandana Hari
While the knee-jerk reaction of the market might have been too much nervousness, it seems to be settling down into a more cool headed assessment of the worst case scenario, she said.
There is a very slim possibility that Iran will block the Strait of Hormuz, since it has very little to gain, according to Vandana Hari, founder and chief executive officer of Vanda Insights.
Iran has a lot to lose by attempting to blockade this vital artery for the oil market. "It risks making enemies out of its neighbouring countries, which so far have been neutral in this (Israel-Iran conflict)," she told NDTV Profit.
Iran would not want to risk losing one of its main markets for oil, that is, China, Hari said.
We saw Brent go up to $79 in the initial minutes of trading this morning, but it has pulled back considerably since then. While the knee-jerk reaction of the market might have been too much nervousness, it seems to be settling down into a more cool headed assessment of the worst case scenario, she said.
"Even if prices do not climb further from here, it is a major concern certainly for consumer nations, import dependent countries in Asia, including India...It's bit of a relief that the market is not hitting the panic button, it's not reacting in the extreme."
Strait Of Hormuz Closure: Will India Be Impacted?
Even if the Strait were to close, it will not have an impact on Indian oil supply since India's portfolio is quite diversified, Hari said. Majorly, India sources oil from Russia and the Russian oil trade route is via the Red Sea and not the Strait of Hormuz.
While Iran's parliamentarians have given the Strait blockade a go-ahead, the final decision rests with the Supreme National Security Council and Supreme leader Ayatollah Khamenei, she said.
"Iran will not take this kind of a reckless step. It has too much to lose by even trying to do it," she added.
