Crude oil prices have crashed sharply after the US and Iran agreed to a two-week ceasefire and decided to return to the negotiating table to explore ways to end one of the most intense conflicts in West Asia in recent history.
US President Donald Trump announced on Truth Social on Tuesday that he will suspend military actions against Iran for two weeks. Iran has accepted the two-week ceasefire plan. As per reports, talks to finally end the conflict are to begin in Islamabad on Friday.
Following the development, Brent Crude prices crashed more than 13% to fall below $95 a barrel, while WTI crude crashed more than 14% to trade near $97 a barrel.
Crude oil prices coming below the $100 per barrel mark is a major relief for countries such as India, which imports about 85-90% of its oil requirements.
Higher crude oil prices are a real problem
A prolonged period of high oil prices can widen India’s current account deficit, hit its fiscal deficit targets, weaken the currency, stoke inflation, and further aggravate foreign capital outflows.
Moreover, increased pressure on the economy may bring uncertainty to the stock market, as the government can be faced with tough decisions on subsidies, interest rates, and the impact on the rupee-dollar exchange rate.
“The ongoing conflict sharply pushed up the cost of India’s crude basket—from around $69 per barrel in February 2026 to about $113 in March. That said, the average crude purchase price for FY26 still remains the lowest in the past five years, offering some cushion to the current account deficit in the near term,” Debopam Chaudhuri, Chief Economist, Piramal Finance, noted.
“However, if prices remain elevated over the next one to two quarters in FY27, the impact on the broader economy could turn significantly adverse, with India’s macroeconomic buffers coming under meaningful strain,” Chaudhuri added.
“India can absorb a short spike, but if crude stays above $100–110 for roughly four to six weeks, the damage begins to spread meaningfully through inflation, margins and government finances. That is when an external oil shock starts showing up inside the domestic economy,” Paresh Bhagat, Chief Investment Officer (CIO), Veer Growth Fund (AIF), Chairman at Mangal Keshav Financial Services, noted.
“If oil cools quickly, India can live with it. If this $100-plus regime persists beyond another few weeks, it stops being an oil story and becomes an earnings downgrade story for India Inc.,” said Bhagat.
According to Sidharth Sogani Jain, the Founder and CEO of Blue Aster Capital and CREBACO Global, for India, which imports about 90% of its oil, prices above $115 for 4-6 weeks would directly hit inflation, especially in energy costs. This could force the Reserve Bank of India (RBI) to raise interest rates to combat inflation, making everyday goods and services more expensive for consumers and businesses.
Can the Nifty take a vault to 25k?
The market is hoping for a final end to the war in West Asia, which will ensure the smooth supply of oil through the Strait of Hormuz. The talks between the US and Iran are resuming, and a complete end to the conflict would mean the end of a major macro headwind for the Indian economy and stock market.
Experts believe that the Brent crude price crash to $94 following the US-Iran ceasefire will turn the market bullish. However, a rally to 25,000 may take time, as it is yet to be assessed how the sustained rise in crude oil prices over the past month has impacted the Indian economic outlook.
“This ceasefire, particularly the agreed reopening of Hormuz Strait, will embolden the bulls to charge again, aided by the fair market valuations,” noted VK Vijayakumar, chief investment strategist at Geojit Investments.
“The ceasefire has turned out to be auspicious for the RBI, which can certainly heave a sigh of relief. The upside risk to inflation and the downside risk to growth can now be managed. Rupee will strengthen, and this may even force the FPIs to turn buyers; at least they will have to cease the sustained selling which will become irrational in the present context,” Vijayakumar added.
Vijayakumar believes short covering can sustain the rally in the market. He said in the near-term, the Nifty 50 will cruise towards 24,000, and further movements will depend on the evolving outlook.
Ajit Mishra, SVP of Research at Religare Broking, said after the sharp dip in crude post the US-Iran ceasefire, the Nifty may test 24,000 soon. Further positive news flows and a sustained move above 24,000 may result in further advances in the coming days.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
