Global oil markets are bracing for turbulence following a major military campaign launched by the United States and Israel against Iran. The operation, described as a large-scale coordinated assault, has ignited fears of disruptions in one of the world’s most critical energy chokepoints: the Strait of Hormuz.
This vital waterway handles over 20% of the world’s crude oil supply, linking the Persian Gulf to the Arabian Sea via Oman. With reports of intense missile barrages and objectives aimed at neutralizing Iran’s naval capabilities—echoing statements attributed to former President Donald Trump—the region risks becoming a full-fledged war zone. Analysts warn that any blockade or interference here could send oil exports from key Middle Eastern producers grinding to a halt.
The immediate market reaction was swift. Brent crude closed up 2% at $72.48 per barrel on Friday, driven by escalating US-Iran tensions and supply disruption anxieties. Experts predict a ‘war premium’ could propel prices even higher, with Barclays Bank forecasting Brent could hit $80 per barrel if supply chains face significant interruptions.
‘While tensions don’t guarantee an instant supply cutoff, the risk premium is now baked into prices,’ the bank noted. Geopolitical volatility has reached a boiling point after Tehran’s retaliatory moves, amplifying uncertainties across energy markets.
For India, a nation importing 85% of its crude needs, the stakes are profoundly high. Rising oil prices inflate import bills, fuel inflation, and threaten economic growth. Yet, New Delhi has proactively diversified its sources, ramping up purchases from the US, Africa, and beyond to reduce reliance on Gulf routes through the Strait.
A senior official highlighted India’s bolstered energy security, with state-run refiners like Indian Oil, Bharat Petroleum, and Hindustan Petroleum maintaining weeks of stockpiles. Shipments continue via alternative paths, providing a buffer against short-term shocks.
Strategic petroleum reserves further fortify India’s position. Facilities at Padur (2.25 million metric tons), Visakhapatnam (1.33 MMT), and Mangaluru (1.5 MMT) stand ready for emergencies. Construction of an additional site at Chandikhol on the coast is underway. These reserves can ease pressures on national oil companies during price spikes, ensuring stability for consumers and the economy.