The US-Iran conflict might end in April: Bernstein says the market might improve, but oil above $60–70 is implausible.

Given the enormous worldwide impact and losses incurred, Bernstein stated on Wednesday that the US may want an off-ramp to the ongoing conflicts with Iran, adding that the coming days will make things apparent. The foreign breakarge stated that a fundamental shift has already occurred and that the events have caused “permanent damage” to many hopes for this year, even though it believes the market will welcome any such development.

“We also believe crude is unlikely to come to the $60-70 levels this year, in sharp contrast to what we have been used to seeing in recent years, this will mean the pressure on rupee will sustain, and the liquidity position, along with RBI’s surging forward book and declining Foreign Currency Assets will constrain the central bank of enough buffers to protect rupee. We see a realistic chance of breaching 98 this year,” it said.

Bernstein maintained its belief that the disputes, which are unlikely to go until April, should finally cease due to a lack of support at home, significant US losses, high petroleum prices, and this year’s US midterm elections.

However, it stated that the problem is no longer incidental to the Strait of Hormuz due to damage to portions of the oil and gas infrastructure. It stated that recovery times could range from a few days for precautionary facility closures to months for damaged facilities. Once things improve, it anticipates that a number of countries would increase their purchases and bolster their petroleum stocks.

“All this means crude is likely to stay elevated this year, even though it returns below $100 a barrel. We see realistic chances of inflation breaching 6 per cent this summer, rate cuts to get pushed for two quarters at the least, and GDP
growth to taper. Taking these into account, we’ve cut the year-end Nifty target to 26,000,” it said.

In case of the stock market, Bernstein said the market fall and the potential for a rebound on the end of a war will likely be a key area of investor scrutiny but what no one knows is when the war ends.