Oil Prices Surge 3.7% to $77.͏42 a͏s Iran ͏Conflict Disrupts ͏Strait of Hormuz Supply Route

Mumba͏i, 5 March͏ 2026͏: Oil prices jumped more than 3% on Thursday, extending a rally as the escalating US-Israeli war with Iran raised concerns of long-term disruption to important Middle East oil and gas supplies. The war entered its sixth day without r͏esolution in sight, keeping global energy markets jittery.

Brent ͏Crude ͏Advance͏s͏ $2.65 to $͏83.99 Per Ba͏rr͏e͏lAmi͏d Fifth͏ Sessi͏o͏n͏ of Gains

Brent crude a͏dvanced for a fifth straight session, going ͏up $2.65, or 3.2͏6%, at $83.99 per barrel at 05:20 GMT. US West Te͏xas Intermediate (WTI) crude also surged $2.76 or 3.7̡0 per cent to $77.42 amid continuing market jitters ‌following attacks in the Middle East. ANZ analysts note in a report on Thursday that fears͏ are still focused on the supply side through the Strait of Hormuz, a cr͏itical important route for global energy transportation.”

Iran Launc͏hes Mi͏ssile Wave at Israel as Conflict ͏Widens Acr͏o͏ss ͏Region

Iran launched a wave of missiles at Israel early on Thursday, sending millions of residents into bomb shelters as the conflict intensified. The escalation came just hours after moves to halt the US air assault were blocked in Washington. On Wednesday, a US submarine sank an Iranian warship off Sri Lanka, killing at least 80 people, while NATO air defences destroyed an Iranian ballistic missile fired towards Turkey. Iranian forces have struck oil tankers in or near the Strait of Hormuz, with explosions reported near a tanker off Kuwait, according to the United Kingdom Maritime Trade Operations.

Strait of Hormuz Shutdown Halts Traffic as Iraq Cuts Output by 1.5 Million Barrels Daily

Iraq, the second-largest crude producer in OPEC, has cut output by nearly 1.5 million barrels a day for lack of storage and an export route following the closure of the Strait of Hormuz, officials told Reuters news agency. Qatar, the biggest liquefied natural gas producer in the Gulf, declared force majeure on gas exports on Wednesday, with sources indicating a return to normal production volumes may take at least a month. At least 200 ships, including oil and LNG tankers as well as cargo vessels, remained at anchor in open waters off the coast of major Gulf producers including Iraq, Saudi Arabia and Qatar, according to Reuters estimates based on MarineTraffic platform data.

India’s Oil Import Bill at Risk as Crude Prices Jump Over 2% on Supply Concerns

Global crude oil prices rose by more than 2 per cent on Thursday after Iran closed the Strait of Hormuz, raising concerns about potential supply disruptions. The April benchmark Brent contract on the Intercontinental Exchange opened trading at $83.26 per barrel, marking an increase of almost 2.43 per cent from its last closing price. The April contract for West Texas Intermediate crude on the New York Mercantile Exchange increased by 2.63 per cent to reach $76.63 per barrel. A container ship that travelled through the Strait of Hormuz was hit by a projectile, causing damage to the vessel and creating new security problems for the region while increasing concerns about possible interruptions of oil transportation through the essential maritime route.

India’s Crude Import Costs to Rise by ₹16,000 Crore for Every $1 Per Barrel Price Increase

India will see its total import expenses increase by ₹16,000 crore if crude oil prices go up by $1 per barrel and this price remains constant for a complete year, given the nation depends on foreign sources for more than 85 per cent of its crude oil needs. Middle Eastern nations provide approximately 50 per cent of this oil supply, with most passing through the Strait of Hormuz. Government sources reported that India maintains a secure energy supply situation despite recent events, with the nation holding enough crude oil, LPG and LNG reserves to sustain its energy needs for 25 days, including domestic reserves and goods presently being transported on vessels towards Indian ports.

India Diversifies Oil Imports to Reduce Gulf Region Dependency Amid Crisis

India has developed new import routes to obtain crude oil from different countries to reduce reliance on any single region for its oil needs. The country has increased oil purchases from Africa, Russia and the United States, achieving improved energy security through multiple energy sources that reduce Gulf region interruption threats. India established strategic petroleum reserves to enhance its capabilities for handling supply disruptions, creating an extra safety net against unexpected interruptions during global supply chain operations or transportation activities. The oil diversification efforts have resulted in reduced dependency on oil shipments through the Strait of Hormuz.

India’s Crude Oil Imports Reach $100.4 Billion in April-January Period of FY26

India spent $100.4 billion to import 206.3 million tonnes of crude oil during the period between April 2025 and January 2026. For the full financial year ended March 31, 2025, the country spent $137 billion on crude oil imports. The current account deficit remains a key vulnerability, with analysts noting that a 10 per cent rise in crude typically widens the current account deficit by about 0.4 per cent of GDP. The combination of a wider current account gap and sustained foreign portfolio outflows could intensify pressure on the Indian rupee.

Oil Marketing Companies Hold Buffer to Cushion Impact of Crude Price Spike

The government’s decision to hold back cuts in retail petrol and diesel prices despite the earlier fall in global crude has given oil marketing companies (OMCs) room to cushion the impact of fresh spikes. According to a report by Nomura, this buffer means that a 10 per cent rise in crude oil prices is likely to translate into only a 10 basis point increase in inflation and a similar impact on GDP growth. Theoretically, a 10 per cent jump in global crude prices should add around 50 basis points to inflation if fully passed on to consumers, but a full pass-through appears unlikely as OMCs are expected to absorb part of the increase through their margins. Retail prices of petrol and diesel are unofficially pegged, with OMCs absorbing the impact through their balance sheets, the report noted.

Oil markets remain highly sensitive to Middle East developments, with the Strait of Hormuz shutdown affecting global energy supplies and inflation expectations. India’s crude import bill faces upward pressure, though strategic reserves and diversified sourcing provide buffers. The pass-through to domestic fuel prices may be limited by oil marketing company margins, but sustained price increases could impact current account deficit and rupee stability.