Oil Price Jumps 10% Amid West Asian Conflict, Closure Of Strait Of Hormuz

(MENAFN- Live Mint) Global oil prices surged nearly 10% on Monday as the conflict in West Asia intensified and oil flows through the Strait of Hormuz remained disrupted, stoking fresh supply concerns.

The April contract of Brent on the Intercontinental Exchange surged over 10% to touch a high of $81.87 per barrel as markets opened on Monday.

At 6:26 AM, the contract was trading at $78.42 per barrel, higher by 7.56% from its previous close. The April contract of West Texas Intermediate was trading at $72.03 per barrel, higher by 7.30% from its previous close.

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The jump in prices was widely expected after the US and Israel attacked Iran, assassinated the Iranian supreme leader Ali Khamenei on Saturday morning.

Iran retaliated by attacking not only Israel but also US military and air bases across countries in the region including Bahrain, UAE, Kuwait, Qatar and Oman, turning the conflict into a regional war within hours.

Reports of Iran attacking oil tankers attempting to cross the Strait have halted vessel movement and raised concerns over global oil flows.

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The Strait of Hormuz remains one of the world's most critical energy chokepoints, with nearly 20% of global petroleum liquids and 20% of global liquefied natural gas (LNG) shipments transiting through the route.

As Iran and several West Asian energy producers straddle the Strait of Hormuz, any escalation in regional conflict could impede shipments through this corridor.

India's exposure

The surge carries significant implications for India, a net importer that meets nearly 90% of its oil requirement through imports.

India, the world's third-largest oil buyer, consumes about 5.5 million barrels of crude daily, of which 1.5–2 million barrels pass through this chokepoint. With India already lowering Russian oil imports, West Asia had emerged as the alternative over the past two months.

A $1 rise in oil prices increases India's annual import bill by about ₹13,000 crore. In FY25, India imported oil worth $160 billion.

Mint earlier reported that Indian refiners are exploring alternate sources to ensure continued supply.

Margin pressure

According to Prashant Vasisht, senior vice president and co-group head, corporate ratings, ICRA Ltd, although Indian refiners may be able to source crude oil from alternate locations such as the US, Africa and South America, elevated energy prices could result in a higher import bill.

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"Additionally, sustained high crude oil prices are expected to moderate marketing margins and profitability of oil marketing companies," he said.

A report by HSBC on Saturday said:“Oil market risk is asymmetrical regarding possible Iran scenarios, with Hormuz transit the main concern. Spare capacity in the Mideast Gulf is significant but would not be accessible if Hormuz is closed.”

However, it kept its oil price projection for calendar year 2026 unchanged at $65 per barrel.

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