Indian oil marketing companies are expected to manage crude oil prices of up to around $90 per barrel over the medium term despite rising geopolitical tensions in West Asia that have disrupted global energy markets, according to a new assessment by CareEdge Ratings.
The analysis indicates that higher refining margins could help Indian oil marketing companies absorb elevated crude prices even as the conflict in the region has triggered concerns over supply routes and price volatility in global oil markets.
The geopolitical tensions around the Strait of Hormuz have driven a sharp increase in crude prices since late February. Benchmark Brent crude briefly crossed the $100 per barrel mark before moderating, reflecting heightened uncertainty over shipping routes in one of the world’s most critical energy corridors.
The Strait of Hormuz remains a major chokepoint for global oil and gas shipments. Approximately 20 per cent of the world’s oil and liquefied natural gas supply passes through the narrow maritime route. Data cited in the report shows that around 20.8 million barrels of oil and petroleum products move through the strait every day.
For India, the situation highlights a structural vulnerability in energy supply logistics. Roughly 40 per cent of the country’s crude oil imports transit through the Strait of Hormuz, making any disruption in the route a potential risk to the country’s energy security.
However, the report notes that India’s exposure to such risks has been partly reduced through a diversified sourcing strategy developed over the past several years. While suppliers in West Asia continue to account for nearly half of India’s petroleum crude and product imports, the country has expanded purchases from other sources including the United States and Russia.
India currently imports approximately 5.5 to 6 million barrels of crude oil per day. Analysts estimate that every $10 increase in crude prices could raise the country’s annual oil import bill by about $20 billion.
The report also highlights that the conflict could affect India through broader economic channels beyond oil supply. Disruptions to shipping routes in the region could slow trade flows, particularly as exports to West Asia account for a significant portion of India’s overseas trade.
Exports to West Asia reached around $64 billion in the financial year 2024–25, representing nearly 15 per cent of India’s total exports during the period.
Another potential impact could emerge through financial markets. Global investors often move toward safe-haven assets during periods of geopolitical uncertainty, particularly the US dollar. Such shifts could place pressure on emerging market currencies including the Indian rupee.
Despite these risks, the report notes that India currently holds sufficient foreign exchange reserves to absorb external shocks, though volatility in currency and financial markets remains possible.
In a more adverse scenario where crude oil prices remain above $100 per barrel for a prolonged period, the report suggests that India’s economic growth could face moderate pressure. However, the overall outlook remains supported by diversified energy sourcing and stable macroeconomic fundamentals.
