The assessment comes as West Asia plunges deeper into conflict following the killing of Iran’s Supreme Leader Ayatollah Khamenei in US and Israeli air strikes, triggering fresh retaliation from Tehran. Iran has shut the Strait of Hormuz, a critical waterway that handles nearly a third of global crude oil trade, rattling commodity markets already grappling with supply chain disruptions, rising freight costs and inflation risks.
Sahdev noted that a significant amount of oil had already moved out of the region before the disruption. “Just a few days ago, Iran was pumping almost 2 million barrels of oil through the same Strait of Hormuz we are talking about,” he said. “What we are seeing is a precautionary suspension rather than a complete shutdown.”He added that the market was unlikely to witness a prolonged blockade. “I’m not looking at prices in the hundreds, which many people are talking about. I’m looking at prices below $100 per barrel,” Sahdev said, pointing out that the crisis has erupted during February, a relatively softer demand period, rather than the peak summer months.
Oil prices have already climbed to seven-month highs, gaining nearly 20% as markets built in a war premium amid the military build-up around Iran. However, Sahdev argued that the worst fears are unlikely to materialise, especially with global producers stepping in to calm nerves.OPEC+ has announced a voluntary production increase of 200,000 barrels per day. Sahdev said the move signals a clear intent to stabilise markets. “Very high oil prices threaten member unity and lead to non-compliance and leakages. What OPEC has done is the right contingency move,” he said, adding that the increase should help cap prices even if markets open with some panic buying.
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For India, the situation remains sensitive as the country imports over 80% of its crude oil, with roughly half of those supplies transiting through the Strait of Hormuz. Sahdev said India’s position is relatively better placed due to recent energy engagements with Europe and the US. “There is a possibility that India could benefit from access to Iranian and Venezuelan barrels if China is restricted,” he said, noting that west coast refineries are configured to process such crude.
He cautioned, however, that liquefied petroleum gas and gas markets need close monitoring. About 20% of global LNG flows are affected, with most Qatari supplies passing through Hormuz. According to Sahdev, the broader conflict is as much about geopolitical leverage as energy. “This is not a sudden attack—it was planned. Markets knew it was imminent,” he said, adding that the strong US naval presence reduces the risk of a severe oil market shock.
While crude markets may remain volatile in the near term, Sahdev maintained that fears of an uncontrollable price spike are overstated. “We may see some panic-driven opening,” he said, “but nowhere near prices in the hundreds.”
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