New Delhi, March 2: Global crude oil prices surged by over 7% on Monday following an escalation of conflict in West Asia. This spike occurred after military strikes by the United States and Israel against Iran.
Brent crude futures reached $82.37 per barrel, marking the highest level since January 2025. The price of Brent crude oil increased by 7.60% to $78.41 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 7.19% to $71.86 per barrel.
Reports indicate that Iran has halted maritime traffic through the critical Strait of Hormuz, prompting governments and oil refineries worldwide to assess their reserves.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) has agreed to increase oil production starting next month. Key members, led by Saudi Arabia and Russia, will add an additional 206,000 barrels per day.
Analysts suggest that the attacks by the U.S. and Israel represent a significant geopolitical shock, increasing the global oil risk premium and boosting demand for safe-haven investments like gold and silver.
Rajeev Sharan, head of criteria, model development, and research at Brickwork Ratings, stated, “India imports nearly 90% of its crude oil. Continuous increases in Brent crude prices will raise fuel costs, heighten inflation, and potentially widen the current account deficit. This could impact the Reserve Bank of India’s inflation control policies and delay interest rate cuts.”
The Indian stock market has already entered a risk-averse phase. Concerns about increased volatility, foreign investor withdrawals, and pressure on the automotive, finance, and energy sectors have been raised.
As long as tensions remain high, precious metals are likely to receive support.
Sharan noted that any reduction in the additional value associated with the conflict would only occur if clarity emerges regarding leadership in Tehran, concrete efforts to de-escalate tensions are made, and assurance is provided that vital oil routes like the Strait of Hormuz remain open.
Reports suggest that if disruptions in the Strait of Hormuz continue, Brent crude prices could exceed $90 per barrel. In the event of a broader regional conflict, prices could surpass $100 per barrel.
JM Financial Institutional Securities reported that every $1 increase in crude oil prices adds approximately $2 billion to India’s annual import bill, exerting pressure on the trade balance.
About 20% of the world’s oil is transported through the Strait of Hormuz, and over 40% of India’s crude oil imports come via this route. In the near future, market trends may depend more on oil prices than on corporate earnings.
Prolonged tensions could lead to increased transportation and marine insurance costs, disrupt maritime routes in the Gulf region, and exert additional pressure on the trade balance.