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Oil Prices Steady After Iran-Led Spike, India Braces for Supply Shock

Crude oil prices showed tentative stability after a sharp spike driven by Iran's retaliatory strikes and threats to shipping in the critical Strait of Hormuz. The US administration announced plans to address rising domestic energy prices, helping to temper market panic. Analysts warn a full-scale conflict disrupting the strait could send Brent crude to $120 per barrel, severely impacting global flows. India, which imports over 40% of its crude via this route, faces a soaring import bill and is exploring suppliers in Russia, Africa, and South America as contingencies.

Key Points: Iran Conflict Spurs Oil Price Spike, India's Supply at Risk

  • Oil steadies after 10% spike
  • Iran targets key shipping strait
  • US plans to address energy prices
  • India explores alternative suppliers
  • Prolonged closure could push Brent to $120
2 min read

Iran war: Crude steadies after sharp spike amid supply chain crisis

Crude oil steadies after a 10% surge on Iran conflict fears. Supply threats at Strait of Hormuz could push Brent to $120, raising India's import bill.

"Every $1 rise in crude increases India's annual import bill by about $2 billion - Report"

New Delhi, March 3

Crude oil traded about 1 per cent higher on on Tuesday, showing signs of a temporary steading following over 10 per cent surge in previous session amid escalating conflict in West Asia and concerns about supply through the Strait of Hormuz.

The US crude futures rose 1.4 per cent to $72.23. Brent crude gained 1.87 per cent to trade at $79.2 per barrel in early session on Tuesday.

Iran's retaliatory strikes on oil and gas facilities have heightened fears of supply disruption, lifting oil prices and stoking inflation worries. Tehran reportedly targeted oil and gas infrastructure in Saudi Arabia and threatened shipping in the strategic Strait of Hormuz.

Analysts said that the announcement from the US administration on steps to address rising domestic energy prices helped temper the panic that drove Monday's spike. US Secretary of State Rubio on Monday informed that Treasury Secretary Scott Bessent and Energy Secretary Chris Wright would announce plans on Tuesday to address rising energy prices.

However, the threat to shipping through the Strait of Hormuz - a chokepoint for global oil flows - continued to underpin prices, market participants said, adding that India would likely be able to absorb a temporary closure of Hormuz.

However, a prolonged closure of the strait will require India to diversify, when the country is already exploring alternative suppliers, including Russia, Africa and South America, according to multiple reports.

Investment bank Morgan Stanley has said Brent crude prices could touch $120 per barrel if a full-scale conflict in West Asia leads to sustained disruption of oil flows through the Strait of Hormuz.

Another recent report said that Brent crude could climb above $90 per barrel with disruption at the strait or exceed $100 per barrel in a broader regional conflict.

A limited conflict could add $5-$10 per barrel, while direct damage to Iranian oil infrastructure could add $10-$12 per barrel, it forecasted.

Every $1 rise in crude increases India's annual import bill by about $2 billion, putting pressure on the trade balance, the report further said.

Around 20 per cent of global oil flows transit the Strait of Hormuz, with over 40 per cent of India's crude imports using the route.

- IANS

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Reader Comments

P
Priya S
Just when inflation was starting to come down a bit... Petrol and diesel prices are going to shoot up again. My monthly budget is already stretched thin. 😓 Hope the government has a plan to cushion the impact on common people.
R
Rohit P
Good to see the report mentions India can absorb a temporary closure. Our strategic reserves have been built up for this. But the key word is *temporary*. A long-term crisis is a different story. Diversification is not an option, it's a necessity.
S
Sarah B
While the economic impact is clear, I wish the article spent a bit more time on the human cost of the conflict itself. These price spikes are a symptom of a much larger tragedy unfolding in West Asia. Our thoughts should be with the people caught in the middle.
V
Vikram M
40% of our oil comes through Hormuz! That's a staggering dependency. This crisis should be a wake-up call to accelerate our renewable energy plans. Solar, wind, green hydrogen - we need to go all in. Jai Hind! 🇮🇳
M
Michael C
The mention of Morgan Stanley's $120 forecast is scary, but these are often worst-case scenarios. Markets tend to overreact initially. The US administration's steps might help stabilize things. Let's hope diplomacy prevails and the strait remains open.

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