The crude price in the international market surged 13% to around $82.37 per barrel — the highest level since January 2025 — after US and Israeli strikes on Iran killed its Supreme Leader, Ali Khamenei, on Saturday.
However, prices later eased, with Brent crude falling to $77.69 per barrel, still up 6.61%, while US West Texas Intermediate (WTI) stood at $71.26 per barrel at 11:26 AM IST. On Friday, Brent had closed just below $73 per barrel, compared with about $60 per barrel in early January.
The ongoing conflict in the region has also damaged oil infrastructure and vessels, with missiles hitting at least three tankers off the Gulf coast and killing one seafarer. There are also reports that Iran has closed navigation through the Strait of Hormuz, a key global shipping route for oil.
India imports more than 85% of its domestic oil requirements, and nearly half of its crude oil imports transit through the Strait of Hormuz. In FY25, Iraq, Saudi Arabia, the UAE, and Kuwait (in the Persian Gulf) together accounted for nearly 46% of India’s annual crude oil imports passing through this chokepoint.
However, according to research by brokerage firm Nomura, temporary supply-side shocks could push oil prices even higher if there is a curtailment of Iran’s oil exports, damage to Gulf energy infrastructure, vessel traffic shortages, or partial disruption in the Strait of Hormuz. For India, the marketing margins of oil marketing companies could come under pressure and may require government support if higher oil prices persist.
According to Nomura’s oil analyst, Bineet Banka, the marketing margins of OMCs are currently around Rs 10 per litre for petrol and Rs 4 per litre for diesel, suggesting there is some buffer to absorb crude oil price shocks before the government needs to consider a fiscal hit to compensate for under-recoveries.
Moreover, as per Nomura, a regime change in Iran could potentially lead to the lifting of sanctions, which may increase global crude oil supply over time and benefit countries such as India.