Iran's top commander General Qassim Soleimani has been killed in a US drone strike in Baghdad and this has been confirmed by the pentagon. Shane Oliver, head investment strategy & chief economist at AMP Capital Investors discussed the impact of geopolitical tensions in the region.

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Oliver said a lot of events that happened in Middle East are impacting oil supplies either direct or indirectly. “It really depends on what happens from here. At present point in time there is a no direct ramifications for oil supply but investors are worried that there will be some impact,” he said, adding that it also depends on what the follow-up reaction from Iran is.

“The geopolitical risk premium will be put back into oil prices – that was the case given all the issues around Iran. It hard to know what it could be. It could step up a couple of dollars a barrel, it could turn out more than that about USD 10/barrel, but I suspect that it’s just another stretch that doesn’t result in actual supply disruption,” he further added.

When asked what would be the impact on India if oil prices were to spike up, he said, “It would be a negative in short-term but there is a longer term issue here that the world is gradually moving away from oil towards other sources of energy, electric and so on. It is a short-term issue for India, higher oil prices will put pressure on inflation that adds to cost of production and cost of living for ordinary Indians at a time when then India economy is down. It’s not a good time.”