Oil Prices Unlikely to Revisit $60-$70 Range in Near Term, Lighthouse Canton Analyst Warns
Global Energy Supply Chains at Risk Amid Strait of Hormuz Disruption
The ongoing disruption in the Strait of Hormuz has significantly increased the vulnerability of global energy supply chains, leading to concerns over a prolonged period of elevated crude prices. According to Pradeep Gupta, Executive Director and Head of Investments India at Lighthouse Canton, crude oil prices are likely to remain in the $90-100 per barrel range due to supply chain disruptions, infrastructure damage, and ongoing capacity constraints.
Gupta believes that the West Asia region still offers double-digit growth potential for Indian infrastructure companies, particularly in non-oil sectors, sustainability projects, data centres, and renewable energy. However, he cautions that expectations must be tempered down in the short to medium term due to uncertainty, elevated project costs, and supply chain disruptions affecting operating margins.
Earnings Season Performance
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The current earnings season has been a mixed bag, with strong revenue growth but visible margin pressure in several sectors. While sectors like FMCG and Financials have shown resilience, strong recovery and growth can be seen in auto and infrastructure. However, Pharma, NBFCs, and manufacturing counters are experiencing persistent margin pressure.
Market Outlook and Earnings Growth Expectations
Gupta remains cautious about the market outlook for FY27, citing the full-blown impact of the West Asia crisis, which will only become visible over the next two quarters. Nifty FY27 earnings growth expectations have moderated, with some estimates now closer to high single digits. Any delayed resolution to the conflict will bring earnings under increasing pressure due to the risk associated with crude, currency, and demand outlook.
Comparison of Crude Oil Price Range
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| Price Range | Pre-Conflict | Post-Conflict |
|---|---|---|
| Crude Oil Price | $60-70 per barrel | $90-100 per barrel |
Timeline of Key Events
- April: A sharp recovery in the market, with overall mood appearing neutral to somewhat positive
- End of the month: A plausible but highly uncertain deadline for a US-Iran deal to be finalized
- Next two quarters: The full-blown impact of the West Asia crisis will become visible, affecting earnings growth expectations
Investor Takeaway
Investors should be cautious of prolonged elevated crude prices due to supply chain disruptions.
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