Brent crude closes at six-month high near $117 as Houthi strikes on Saudi Arabia rattle markets

Global oil prices ended the week at their highest level in six months, a worrying sign for India, which imports most of the crude it uses.

Oil's sharp climb

Brent crude settled at $116.72 a barrel on Friday, up $3.55 or about 3.1 per cent, its highest close since April 29, Reuters reported. US benchmark WTI rose 3.8 per cent to $103.27. Brent gained about 6 per cent over the week.

The rally was driven by Houthi attacks inside Saudi Arabia, which raised fears for the security of energy infrastructure in the world's top oil-exporting region. Saudi Aramco told staff to evacuate its Dhahran headquarters on Thursday as fighting intensified, FinanceFeeds reported. A reported oil spill off the UAE added to supply concerns.

Indian markets under strain

Indian shares had already been weighed down by the rise in oil. On Friday the Sensex fell for a fourth straight session, closing 125.56 points lower at 73,123.83, while the Nifty 50 lost 87.65 points to end at 22,600, Business Standard reported. Smaller stocks fared worse, with the Nifty Midcap 100 down 2.21 per cent and the Smallcap 100 down 2.94 per cent. Every sectoral index ended lower, led by metals.

The India VIX volatility index rose about 6 per cent, pointing to nervousness among traders. Foreign institutional investors sold shares worth about Rs 3,459 crore on Thursday, partly offset by about Rs 2,891 crore of buying by domestic institutions, according to provisional data cited by Upstox.

What to watch this week

Markets will reopen on Monday with oil, the Middle East and the US Federal Reserve in focus. The Fed meets on October 27-28, and the US 10-year Treasury yield is hovering just below 5 per cent. Investors will also track the next steps in Jio Platforms' heavily subscribed IPO and the second-quarter earnings season.

Why it matters for India

Higher crude prices raise India's import bill, put pressure on the rupee and can feed into fuel and transport costs, adding to inflation. Oil marketing companies' margins and the government's fiscal maths are also sensitive to prolonged prices above $110 a barrel.