According to market expert Arvind Sanger from Geosphere Capital, oil prices are unlikely to return to the $60-$70 range anytime soon, with markets needing to adjust to a prolonged phase of elevated energy prices. Speaking to ET Now, Sanger noted that while fears of crude touching $150 a barrel have faded, the probability of oil surging back to extreme levels has reduced significantly. However, he cautioned that Brent crude could still briefly move back toward $110 if the supply normalisation process takes longer than expected.
Sanger believes both the United States and Iran appear increasingly inclined toward a negotiated settlement, lowering the chances of a severe disruption in oil supply. As reported by The Economic Times, he stated that "The probability of a spike is much lower now because it is very clear that President Trump wants a deal and Iran wants a deal too and it knows it is getting a deal on much more favourable terms." He noted that Iran has come out on top in the conflict, with the US appearing very ineffective in the war, creating mounting pressure for Trump to secure a deal that does not appear politically damaging domestically.
Sanger believes the unwinding of supply disruptions will not happen overnight, with months not weeks required for normalisation. According to his assessment, once oil flows from the Persian Gulf stabilise, consuming nations will begin rebuilding inventories that were heavily depleted during the conflict period. This process itself could create additional demand pressure, with oil prices likely to sustain the $80-$90 range for an extended period. The impact extends beyond crude oil, as about 30% of the world's fertilizer supply moves through the Strait of Hormuz, making food production more expensive for farmers and eventually passing costs to consumers.
While $85-$90 oil may not severely damage global growth, Sanger warned that the broader inflation picture remains concerning. As reported by The Economic Times, he noted that energy inflation is no longer limited to crude oil alone, with natural gas, fertilisers, and other commodities also contributing to price pressures worldwide. Higher-for-longer inflation could force several central banks to maintain tight monetary policies or even raise rates again, potentially slowing economic growth in the short term. Recent data confirms this trend, with groceries rising 2.9% in April compared to the same month last year - the highest year-over-year inflation rate for the category since August 2023.
For emerging markets like India, easing crude volatility would provide significant relief, especially given the country's dependence on imported energy and fertilisers. According to Sanger's analysis, India would benefit if oil price upside risks fade and fertiliser supply concerns ease. However, he cautioned that the dominant global investment narrative has shifted heavily toward artificial intelligence, an area where India is not currently viewed as a primary beneficiary. He suggested that India will need to demonstrate stronger domestic growth drivers beyond the global AI boom, particularly at a time when inflationary pressures could remain elevated.
