The spike in oil prices poses a significant challenge for India, which imports nearly 90% of its crude oil needs.
International crude oil prices climbed more than 3% on Monday as tensions in West Asia escalated, with Yemen’s Houthi militants opening a new front through missile and drone strikes on Israel.
At around 6:30 am, the May contract of Brent crude on the Intercontinental Exchange was trading at $115.91 per barrel, up 3% from the previous close. Meanwhile, the May contract of West Texas Intermediate (WTI) on NYMEX rose 3.03% to $102.61 per barrel.
The conflict involving the US, Israel and Iran has now entered its fifth week, with nearly 20% of global oil and gas supplies still constrained due to ongoing disruptions.
Supply risks intensify
In addition to the blockade of the Strait of Hormuz, several oil and gas facilities, refineries and fields have been damaged, raising concerns about prolonged supply disruptions.
Over the weekend, Yemen’s Houthi group launched attacks on Israel for the first time since US and Israeli strikes on Iran began a month ago, widening the scope of the conflict.
The Houthis, who control large parts of northern Yemen, carried out two rounds of missile and drone attacks within 24 hours on Saturday, according to media reports. While Israel said the strikes were intercepted, the group vowed to continue operations in support of allied fronts across the region.
Their involvement has also heightened fears of disruption in the Bab-el-Mandeb Strait—a vital corridor connecting the Red Sea to the Gulf of Aden and the Indian Ocean, and a key route for global energy shipments.
The Houthis had previously targeted vessels in this region following the 2023 Hamas-Israel conflict, though such attacks had eased last year.
Implications for India
The spike in oil prices poses a significant challenge for India, which imports nearly 90% of its crude oil needs.
As of March 26, the Indian crude basket was priced at $115.75 per barrel, easing from peaks above $150 earlier this month. However, sustained high prices could weigh heavily on the economy.
A $1 increase in crude prices over a year can add roughly ₹16,000 crore to India’s import bill, putting pressure on inflation and fiscal balances.
Addressing the nation during the ‘Mann Ki Baat’ programme, Prime Minister Narendra Modi noted that the conflict is unfolding in a region critical to India’s energy supplies and is contributing to a global fuel crisis.
