Global crude oil prices rose by more than 7% on Monday due to increased tensions in West Asia following military actions by the US and Israel against Iran. Brent crude futures reached $82.37, the highest level since January 2025. Brent crude oil price surged by 7.60% to $78.41 per barrel, while US West Texas Intermediate (WTI) crude futures climbed by 7.19% to $71.86.
Iran’s decision to close the vital Strait of Hormuz has led to concerns among governments and refiners, prompting assessments of oil stockpiles. Additionally, OPEC has agreed to resume oil production increases next month in response to the US-Israeli strikes on Iran. Major members, including Saudi Arabia and Russia, will collectively add 206,000 barrels per day.
Analysts noted that the US-Israeli strikes on Iran have caused a significant geopolitical impact, elevating the global oil risk premium and increasing demand for safe-haven assets like gold and silver. The rise in Brent prices poses challenges for India, which heavily relies on imported crude oil. Any sustained increase in Brent prices could result in higher fuel costs, broader inflation, and a wider current account deficit, potentially affecting the Reserve Bank of India’s disinflation strategy and leading to delays in rate cuts.
Indian markets have reacted with caution, anticipating more volatility, foreign investor outflows, and pressure on sectors such as autos, financials, and energy. The conflict is expected to support precious metals as long as escalation risks persist. The resolution of tensions and the assurance of open vital oil routes like the Strait of Hormuz are crucial in easing the conflict premium.
