Last week US President Donald Trump decided to join the Israel-Iran war. American forces bombed three key nuclear sites in Iran, fuelling tensions in the middle east further. Even before the US officially stepped in, Israel had already been targeting Iran for days.
Now, with both the US and Israel in direct conflict with Iran, one key commodity is getting hit harder. That’s crude oil. Why? Because Iran is the ninth-largest oil producer in the world. It produces about 3.3 million barrels of crude oil every day, and exports around 2 million barrels of crude and refined fuel daily. So, if Iran’s oil output slows down, that means less crude oil in the global market.
But there’s more. For the first time in history, Iran’s parliament has decided to block the Strait of Hormuz, the narrow waterway connecting the Persian Gulf and the Gulf of Oman. This move could prevent major oil-producing countries like Saudi Arabia and the UAE from transporting oil by sea.
According to the US Energy Information Administration, this single route handles one-fourth of the world’s total seaborne oil trade. If Iran follows through, it’ll seriously disrupt global oil supply.
That’s already playing out in the markets. Crude oil prices have shot up over 20% in just a month. At the time of writing, Brent Crude was trading at around $78 dollars per barrel. But according to experts, this is just the start.
A Reuters report says Goldman Sachs believes Brent crude could briefly peak at 110 dollars per barrel, if oil flow through the Strait of Hormuz is halved for a month and stays down by 10 percent for the rest of the year.
Back home, India’s Petroleum Minister Hardeep Singh Puri has said the country has enough oil and gas reserves to last for weeks. He wrote on X, “Our Oil Marketing Companies have supplies of several weeks and continue to receive energy supplies from several routes. We will take all necessary steps to ensure stability of supplies of fuel to our citizens.’
Reports also suggest that India has ramped up oil imports from Russia to cushion the blow. But remember, India is the world’s third-largest importer of crude oil. So even if we’re prepared for now, rising global prices will eventually hit us too. And when that happens, yes, your monthly fuel bill will likely go up.
