Crude oil prices surged more than 4% on Thursday, with Brent crude climbing above $105 a barrel, as escalating attacks and disruptions along key Middle East shipping routes intensified concerns over global oil supplies.
At around 8.44 pm IST, Brent crude was trading at $105.10 a barrel, up 4.24%, while West Texas Intermediate (WTI) was at $100.10 a barrel, up 4.21%. The latest surge came after Brent crude crossed the $100 mark earlier this week as oil tankers came under renewed attacks in the Persian Gulf.
Rising fuel costs are also raising concerns over inflation and putting additional pressure on consumers, while markets are increasingly worried about the economic impact of prolonged disruptions to oil supplies. The renewed escalation between the US and Iran has pushed international crude prices above the $100-a-barrel mark for the first time in six weeks, as the conflict in West Asia intensifies.
The conflict, which had eased for some time, has again turned into a full-fledged confrontation, raising fears of a possible disruption to shipping through the Strait of Hormuz, a key oil transport route through which around 20% of global crude and gas supplies pass. The escalation has also pushed up India's crude import costs. The Indian crude basket, which comprises Sweet grade (Brent Dated) and Sour grade (Oman and Dubai average) crude imported by Indian refineries, rose to $108.91 a barrel on September 8, according to data.
For India, which imports more than 88% of its crude oil requirement, a sustained rise in international oil prices could increase the country's import bill and put pressure on fuel economics. The West Asia war, which began on February 28 and has lasted more than 100 days, has already increased India's import bill for crude oil and gas.
During April-July, India's crude import bill stood at $63.37 billion, up 56% year-on-year. Crude imports accounted for more than half of the country's total oil import bill during the period. Analysts have estimated that every $1 increase in crude oil prices sustained for a year could add around Rs 18,000 crore to India's import bill, increasing pressure on the country's external finances.
