The launch of a high-intensity US-Israel military operation against Iran has markets reeling, with oil prices climbing 2% to close Brent at $72.48 per barrel. Central to the panic is the Strait of Hormuz, where 20% of the planet’s oil supply navigates from Persian Gulf nations to global markets.
Aiming to eviscerate Iran’s sea power amid barrage after barrage of missiles, the strikes evoke past threats amplified by Trump-era rhetoric. Blockades here could devastate exports, propelling prices skyward via an unavoidable war-induced markup.
Barclays pegs a potential $80 Brent threshold on major supply hits, while noting escalation doesn’t equate to instant paralysis—risk aversion rules the trading floor nonetheless.
No country feels the pinch like India, 85% reliant on foreign crude. Volatility hikes costs, stokes price pressures, and hampers expansion. Diversification triumphs: boosted US and African buys sidestep Hormuz perils.
Major OMCs stockpile for weeks, leveraging diverse lanes. Strategic reserves—2.25 MMT at Padur, 1.33 MMT at Visakhapatnam, 1.5 MMT at Mangaluru, and Chandikhol in progress—stand as sentinels. They can flood the system in dire straits, granting breathing room to IOC, BPCL, and HPCL alike.
This episode spotlights oil’s intertwined fate with conflict, urging sustained vigilance and resilience-building worldwide.