Crude oil prices surged by over 10 dollars in a single day on Thursday. The prices shot up to USD 120 and later cooled down to USD 110 on the news of a likely nuclear deal between America and Iran. Mrityunjay Kumar Jha, Anchor and Commodity Editor at Zee Business decodes the importance of Iran in terms of crude supply? He also explains what the nuclear deals means?  

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Even if the supply of crude oil from Russia is reduced or stops completely in the global market, it may not be compensated by Iran. But the market is still reacting to that news, Jha says. 

If there is some relaxation in tensions between Russia and Ukraine over the next few days, a slight fall will likely be seen in the crude oil price, Motilal Oswal, Managing Director & Chief Executive Officer of Motilal Oswal group said. The market is overstretched, he said. 

He advised not to invest for the long term for now. He recommends selling with a short term view for the price target of Rs 8100. He puts the stop loss at Rs 8450. 

Kunal Shah, head of research commodities of Nirmal Bang, said the situation is very dicey. If we look at the crude oil market, 5-6 million barrels per day is the deficit. There may also be a slight cooling-off. The price is currently running at Rs 8250 which can show Rs 8000 levels. But for a long recession, the market needs a trigger, for which the political tension should be reduced.

Jigar Trivedi, Manager and Commodity Fundamental Research at Anand Rathi, said if de-escalation happens between US-Iran, a positive deal will be done and the supply of crude oil in the market will increase. That could then lead to sharp correction.

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