Brace for $100 Oil? Brent jumps from $65 to $75 as 20% of global crude flows face threat through Iran's Strait of Hormuz

Time of India

4 hours ago

New Delhi: As tensions escalate between Iran and Israel, crude oil prices have surged nearly 15 per cent in just weeks, prompting New Delhi to take stock of India's energy security. Brent crude touched $75 a barrel—up from around $65 before the conflict—fuelled by fears of disruption through the
Strait of Hormuz
, the world's most critical oil artery.
India's Ministry of Petroleum and Natural Gas has swung into action, with top officials and PSU oil firms holding a high-level review meeting to assess the situation. A senior ministry official, speaking on condition of anonymity, said, 'There is no immediate threat to India's oil supplies, but the global market is on edge. We are watching developments closely and will act to safeguard consumer interest and macroeconomic stability.'
Strait of Hormuz at centre of global oil anxiety
The Strait of Hormuz, controlled by Iran, sees nearly 17 million barrels per day—about 20 per cent of global oil trade—flow through its narrow waters. Experts warn that any escalation in the conflict could lead to shipping blockades or strikes on key energy infrastructure.
Rahul Kalantri, Vice President of Commodities at Mehta Equities, said, 'Iran could threaten or block shipping in the Strait—causing major supply chain disruptions. Any military escalation or disruption in shipping or output could lead to a 10–20 per cent jump in crude prices.'
Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings at ICRA, noted, 'As Iran straddles the Strait of Hormuz and its production is about 3 million barrels per day, targeted attacks on oil infrastructure can cause disruptions. Crude oil prices have already risen from ~$65/bbl to ~$75/bbl. Further impact will depend on how the situation unfolds.'
Will Indian fuel supplies be hit?
Although India has stopped importing crude from Iran due to sanctions, any disruption in Middle East shipping routes could still impact domestic fuel supplies. India sources over 85 per cent of its crude oil from overseas, largely from the Gulf.
'If the Strait is disrupted, even non-Iranian crude flows could be affected, tightening supply. Even if India shifts to suppliers like Russia, the US or West Africa, freight and logistics costs will rise,' Kalantri added.
Impact on domestic fuel prices and industry
A sustained spike in international crude prices could eventually lead to higher petrol and diesel rates in India. However, analysts believe that the government is likely to absorb near-term shocks without immediately passing the burden onto consumers.
Vasisht said, 'If oil prices remain elevated, it could impact inflation and make petroleum products more expensive for consumers.' Kalantri added, 'We don't believe that the government is likely to immediately transfer this burden to end consumers, but key industries could face margin pressures.'
India's contingency preparedness
Union Petroleum Minister Hardeep Singh Puri said on June 16 that India is 'comfortably placed' to meet its fuel needs despite global volatility. Reviewing the situation with top officials, he posted on X: 'As oil is on the boil, all eyes are on the ball… In the increasingly volatile geopolitical situation, reviewed the petroleum products supply situation with petroleum ministry officials and our PSU OMCs.'
He added, 'Under the visionary leadership of PM Modi, we have diversified our import basket substantially and are comfortably placed to meet our fuel supply needs.'
India's bilateral exposure and trade ties
India exports goods worth $1.24 billion to Iran and imports $441.9 million. With Israel, exports total $2.15 billion while imports stand at $1.61 billion. The growing instability in the region not only threatens energy but broader trade flows.
Looking ahead: Strategic reserves, market signals
Global oil traders are already hedging for more volatility. Brent call options for $100 a barrel in August are trading in record volumes. Meanwhile, the US strategic petroleum reserve has inched up to 402 million barrels, but commercial stockpiles are trending downward.
'Oil markets are entering a high-alert phase. Even if no direct supply cut occurs, risk premiums alone can drive volatility,' said Kalantri.