Oil markets are bracing for a surge in prices following a major military operation launched by the United States and Israel against Iran, escalating geopolitical tensions and putting the Strait of Hormuz at risk of disruption. The region, a critical passage for over 20 per cent of global oil shipments, faces potential delays amid missile strikes and US threats targeting Iran’s naval capabilities.
Analysts warn that the coordinated strikes introduce a “war premium” to crude pricing, as the possibility of retaliatory action from Iran raises concerns over supply disruptions. Brent crude futures settled 2 per cent higher, at $72.48 per barrel, reflecting immediate market reactions to the unfolding crisis. Barclays Bank projected that Brent could reach $80 per barrel if supply interruptions intensify, though short-term shipments may continue from unaffected routes.
India’s energy security is expected to remain resilient despite potential global price spikes, thanks to diversification of crude imports beyond Gulf sources. Officials highlighted that oil marketing companies, including Indian Oil, Bharat Petroleum, and Hindustan Petroleum, maintain several weeks of inventory and continue receiving supplies through alternative channels.
A surge in international oil prices can inflate India’s import bill and contribute to higher inflation, potentially slowing economic growth. However, the country has bolstered strategic reserves to cushion such shocks. Key storage facilities include Pudur (2.25 million metric tonnes), Visakhapatnam (1.33 MMT), and Mangalore (1.5 MMT), with an additional coastal facility under construction at Chandikhol. These reserves allow national oil companies to maintain supply continuity during emergencies or periods of rapid price escalation.
The Strait of Hormuz, linking the Persian Gulf to the Arabian Sea via the Gulf of Oman, has historically been a pivotal corridor for global crude exports. The recent missile bombardments targeting Tehran, including areas near government offices and University Street, threaten smooth transit through this chokepoint.
Experts note that while immediate supply interruptions may be limited, the broader geopolitical uncertainty drives risk premiums in global oil markets. India’s import diversification strategy and strategic crude storage are expected to mitigate domestic impact, ensuring short-term energy security.
With the US emphasizing the neutralization of Iran’s navy and Iran signaling potential retaliation, the situation remains fluid. Global markets and policy makers will continue monitoring developments, as escalating tensions could have far-reaching consequences for crude pricing, inflation, and energy-dependent sectors worldwide.
