India Market Open : Underlining risk of increased geopolitical tensions
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00:00 Vandana Harish, she's founder and CEO at Vandana Insights, joins us on the show for a crude
00:03 update. Vandana, what do you think is your base case now that you've seen what's happened
00:08 on geopolitics in the last 24 hours? Good morning, Neeraj. So it seems a bit
00:16 counterintuitive at first blush, but this attack has actually de-escalated tensions between Iran
00:23 and Israel considerably after the ramp up that we saw following the April 1 attack on Iran's
00:31 consulate in Damascus. So why is it actually having the opposite effect? We see crude
00:40 prices pulling back this morning. Is that you really have to look at the nature of the attack.
00:48 It appears to have been carefully choreographed, telegraphed. There was plenty of advance notice
00:55 and even details about the planned attack that Iran gave to the US and US allies, as a result
01:02 of which the 300 something drones and missiles that were fired had absolutely no damage whatsoever
01:11 on Israel. So what it amounts to is a show of strength from Iran, which Iran wanted,
01:19 it had promised retaliation with no damage whatsoever on Israel. So for the time being,
01:28 you're going to see, I expect a continued pullback in the risk premium, I would say nearly $3 per
01:37 barrel that had become injected into crude after April 1. Having said that, we haven't seen a flare
01:45 up in crude thus far. I hear you say that you expect this reduction in premium, but if there
01:50 were to be no further geopolitical issues between Iran and Israel, at least I know the other two
01:56 wars are on, but if there are no further issues between Iran and Israel, do you expect that 90
02:03 for Brent is circa the level that it could say, or do you expect that over the course of the next
02:08 one month, supply cards, other geopolitics not coming into play, that crude could make a beeline
02:12 to 100 as well? No, 100 is not my base case. It wasn't even before the past weekend. But Neeraj,
02:20 excellent question. So what happens next to crude, really, is contingent, I would say,
02:25 on two main factors, of course, the Gaza war premium and the Ukraine war premium in that order.
02:30 See, with regards to the Gaza war, it has been festering for more than six months,
02:36 the ceasefire and hostage deal negotiations, which got yet another impetus the previous weekend and
02:43 had the talks had been going on in Cairo through last week, the US and Qatar and Egypt have
02:50 renewed the push to try and bridge that gap between Israel and Hamas. See, a big question
02:56 mark still hangs on that. And as long as the Gaza war is festering, and we still don't know what
03:02 Israel is going to do with its planned attack on on Rafa, you know, which could again flare up the
03:07 tensions with regard to Gaza all over again. So it's difficult to see, it's really hard to see
03:14 crude to pull back any further substantially. And of course, Ukraine is also all bubbling away again,
03:21 with attacks and counterattacks between Ukraine and Russia. So hard to see crude slipping too
03:28 much from the current levels. Okay, 100 not the base case, but hard to see it slipping as well.
03:32 Vandana Hari, thank you so much for taking the time out and being with us today. Really appreciate
03:35 your time.