Tensions in the Middle East have ignited a crude oil price surge, with Brent crude crossing $83 per barrel on Thursday after a more-than-2% rally. Iran’s decision to shutter the Strait of Hormuz has sparked widespread concerns about supply chain interruptions, sending shockwaves through energy markets worldwide.
The Intercontinental Exchange’s April Brent contract rose 2.43% to $83.26 in morning trade, while NYMEX WTI April futures gained 2.63% to $76.63 per barrel. Traders are on edge following reports of a projectile attack on a container vessel navigating the strait, which sustained significant damage.
This escalation comes against a backdrop of regional instability, threatening the passage of roughly 20% of global oil supplies. For heavy importers like India, the stakes are high. Dependent on imports for 85% of its oil, with 50% flowing through Hormuz from Middle East suppliers, even modest price hikes pack a punch.
A mere $1 per barrel rise could add 16,000 crore rupees ($1.9 billion) to India’s annual import costs. Fuel prices at pumps might climb, squeezing consumers and businesses alike. However, precautionary measures offer a buffer: India maintains 25 days of crude reserves and equivalent petroleum stocks, inclusive of in-transit cargoes.
Strategic diversification has been key. India has pivoted toward Russia, Africa, and U.S. sources, diminishing the share of Hormuz-dependent imports. Last fiscal year through March 2025, crude imports cost $137 billion. In the ongoing year’s first 10 months, 206.3 million tons were bought for $100.4 billion.
Government insiders express cautious optimism, citing robust stockpiles and alternative routes. Still, experts caution against complacency; extended closures could overwhelm reserves and drive prices to uncharted highs. As world leaders scramble for solutions, the energy crisis looms large, potentially reshaping global trade dynamics and inflation trajectories for months to come.