Crude Oil Price Steady, But Could Remain Volatile In The Near Term

Crude oil price has steadied, but, analysts remain worried that simmering tensions in the Middle East, could spark a fresh rally.

At the moment, US President Donald Trump would avoid engaging in any military confrontation with Iran, given that US Presidential elections are due later this year. Military action against Iran may dim the prospects of a re-election for the US President.

This means that is highly likely that crude oil prices may remain stable at least until Nov 2020, when the US Presidential elections are due.

Brent Crude was last seen trading at $65 a barrel. In all probability crude could remain steady at these levels, and trade in a tight range of $60 to 70 per barrel.

Brent crude price above the $70 per barrel mark is not good news for India, as it could push the fiscal deficit higher. Most analysts remain worried that it could also stoke inflation and put pressure on the fiscal deficit. Already, analysts remain worried that the fiscal deficit target set for 2019-20 may well be breached by the Union Finance Minister.

Rising Brent Crude price puts pressure not only on the fiscal deficit, but, also on inflation, which means the RBI would be worried on cutting interest rates.

All in all, it looks that crude prices have remained steady, but, volatility is unlikely to go away soon.

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