Global crude benchmarks steadied Tuesday with modest gains, paring back Monday’s frenzied 10% surge triggered by Iran-West Asia conflict escalation and threats to the vital Strait of Hormuz oil corridor.
West Texas Intermediate (WTI) advanced 1.4% to $72.23/barrel, and Brent crude gained 1.87% to $79.2 in initial trading. The pullback comes amid heightened risks to energy flows, as Tehran reportedly targeted Saudi oil infrastructure and issued stern advisories to shipping in the chokepoint strait.
US officials moved to calm markets, with Foreign Secretary Marco Rubio revealing imminent announcements from Treasury and Energy departments on strategies to mitigate price spikes at home.
Carrying 20% of the world’s seaborne oil trade – and more than 40% of India’s imports – any Hormuz blockade poses existential threats. Analysts from Morgan Stanley project Brent could hit $120/barrel in worst-case scenarios of sustained disruptions or all-out war.
Shorter-term estimates peg price hikes at $5-10/barrel for limited clashes, or $10-12 for direct hits on Iranian facilities. India’s exposure is acute: a $1/barrel rise inflates its oil import costs by $2 billion yearly, fueling trade deficits and inflation.
New Delhi is proactively scouting alternatives from Russia, African nations, and Latin America to buffer longer-term risks. While strategic stockpiles offer breathing room, the market’s fear gauge remains elevated, betting on prolonged uncertainty in this oil-rich powder keg.