U.S. West Texas Intermediate (WTI) crude rose $4.66, or 6.95%, to $71.68 a barrel, after earlier reaching $75.33, its highest level since June 2025.Israel launched a new wave of attacks on Tehran on Sunday, with Iran retaliating with additional missile strikes. The attacks also endangered commercial ships, with missiles hitting at least three tankers off the Gulf coast and killing one seafarer, shipping sources and officials told Reuters.
Iran said it had cut off navigation through the Strait of Hormuz, prompting Asian governments and refiners, major buyers of crude, to review their oil supplies.
What does it mean for India?
Domestic brokerage firm JM Financial said Brent crude had already risen to a seven-month high of around $72.8 a barrel amid strike fears. The scenario analysis shows that limited retaliation could raise prices by $5-10 per barrel; direct damage to Iran’s oil infrastructure could generate $10-12 per barrel; A disruption in the Strait of Hormuz could push crude above $90 a barrel; and a broader regional war could push prices above $100 a barrel. Nearly 20% of global oil flows pass through the Strait of Hormuz, while more than 40% of India’s crude oil imports pass through this route, underscoring the country’s significant exposure.
It added that every one dollar increase in crude oil prices increases India’s annual import bill by about $2 billion. Continued tensions could increase maritime logistics and insurance costs, disrupt Gulf shipping lanes and increase pressure on the trade balance.
The rupee faces a devaluation in the near term, with the RBI possibly intervening through foreign exchange reserves. The transmission mechanism is clear: higher crude oil prices increase inflation risk; increased inflation pushes bond yields higher; and rising yields are depressing stock valuation multiples.
If tensions escalate to such an extent that the Strait of Hormuz is threatened, the risk premium may become structural instead of proportional. Even the possibility of a partial disruption of this critical chokepoint could add a geopolitical premium of $20-$40 per barrel, potentially pushing crude back to the $95-$110+ range, well beyond the direct mechanical impact of Iranian supply losses alone, Equirus Securities said in a report.
The International Energy Agency (IEA) said it is closely monitoring developments in the Middle East and remains in contact with major regional producers and IEA member governments, executive director Fatih Birol said on Sunday. The agency coordinates the release of Strategic Petroleum Reserves (SPR) from developed countries during supply emergencies.
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