A dramatic escalation in the Middle East has crude oil prices on edge, with Brent crude jumping 2% to $72.48 per barrel amid a sweeping US-Israel military offensive against Iran. The bold strikes target Iran’s military infrastructure, raising the specter of chaos in the Strait of Hormuz—the artery through which 20%+ of global oil flows.
Heavy missile exchanges and plans to dismantle Iran’s navy signal a high-stakes confrontation. If the Strait turns into a conflict zone, oil shipments from powerhouse producers like Saudi Arabia and the UAE could face severe bottlenecks, analysts say. This perfect storm of geopolitics and supply risks is fueling a classic ‘war premium’ in energy markets.
Barclays warns of $80 oil if disruptions materialize, though immediate halts aren’t certain. Markets are pricing in the uncertainty regardless, as Iran’s counterstrikes heighten regional instability.
India watches closely as an oil-hungry importer covering 85% of its needs overseas. Price surges mean ballooning import costs and inflationary pressures that could derail growth momentum. But strategic moves have cushioned the blow: diversified suppliers from America and Africa lessen Gulf dependency.
Oil marketing giants hold ample reserves for weeks, sourcing via multiple routes. India’s strategic stockpiles—Padur’s 2.25 MMT, Visakhapatnam’s 1.33 MMT, Mangaluru’s 1.5 MMT, plus the new Chandikhol facility—offer a lifeline. In crises, these can be tapped to stabilize supplies and shield refiners from volatility.
The broader implication? Prolonged conflict could reshape global energy dynamics, testing supply chains and economies worldwide. For now, markets remain hyper-vigilant, with every headline from the Gulf under a microscope.