Global crude oil prices surged about 20% on Monday, crossing the $100-per-barrel mark as the intensifying war in West Asia heightened fears of supply disruptions in global energy markets.
Benchmark Brent crude spiked as much as 20% to $111.04 a barrel earlier in the session— the highest level since July 2022— while West Texas Intermediate jumped about 22%.
At 7:38 a.m., the April contract of Brent on the Intercontinental Exchange was trading at $114.30 per barrel, up 23.23% from its previous close. The April contract of WTI on the New York Mercantile Exchange rose 26.08% to $114.61 a barrel.
The rally comes as oil flows from the Middle East face growing disruption following the near-closure of the Strait of Hormuz, a narrow waterway that typically handles about one-fifth of global oil trade.
War escalation
The conflict has intensified after United States and Israel launched strikes on Iran more than a week ago, triggering retaliatory attacks and widening the conflict across the region.
Israel has carried out fresh strikes on Lebanon, while energy infrastructure across Iran — including desalination plants and oil depots — has reportedly come under attack.
Iran on Sunday named Mojtaba Khamenei, the son of former leader Ali Khamenei, as the country’s Supreme Leader, according to the semi-official Fars news agency.
The Islamic Revolutionary Guard Corps pledged obedience to the new leader. Mojtaba Khamenei is believed to be close to the IRGC, signalling continuity in Iran’s hardline posture.
The conflict has already drawn in more than a dozen countries and is raising fears of a broader geopolitical crisis.
India exposure
The surge in oil prices has major implications for India, which imports about 90% of its crude oil requirements.
An increase of $1 per barrel sustained for a year can raise India’s import bill by around ₹16,000 crore. The country’s oil import bill stood at $167 billion in FY25.
West Asia supplies over 50% of India’s crude, and of the 5.5-5.6 million barrels consumed daily, roughly 1.5-2 million barrels normally transit through the Strait of Hormuz.
Over the past week, India has increased sourcing from alternative regions including Russia, Africa, and South America.
Officials said that with additional crude arriving from other sources, India is “comfortably positioned” in terms of crude oil stocks.
Further, as reported by Mint, after a 30-day waiver granted to India for importing Russian oil, Indian refiners have ramped up procurement of Russian crude on vessels from both sanctioned and non-sanctioned entities.
India had already been purchasing non-sanctioned Russian oil, but the waiver allows refiners to procure sanctioned cargoes as well, provided they were loaded on vessels by 5 March.
Supply disruptions
Concerns over supply have intensified as several Middle East producers begin curbing output due to logistical disruptions.
Kuwait and the United Arab Emirates have reportedly started reducing oil production as storage fills up quickly amid the shipping halt through Hormuz. Iraq also began shutting in production last week, with reports indicating output has dropped by as much as 60%.
The inability of tankers to move through the strait has meant crude cannot be loaded for export, forcing producers to scale back output.
“The psychological level of $100 oil may just be a short-term price target on its way to higher levels as the conflict drags on,” said Andy Lipow, president of Lipow Oil Associates. “Oil production is throttled back as oil storage fills up because tankers are unable to load.”
Energy infrastructure across the region is also under threat. Saudi Arabia said it intercepted drones targeting the Shaybah oil field, which produces about 1 million barrels a day. The kingdom last week halted operations at the Ras Tanura refinery, its largest facility, and is attempting to divert crude exports to Red Sea ports.
Political tensions
Donald Trump weighed in on the oil price surge, calling the rise a “very small price to pay” for peace in a late-night post on his social media platform Truth Social.
He added that prices would fall rapidly “when the destruction of the Iran nuclear threat is over.” Trump also said the US may consider striking additional targets in Iran that were not previously under consideration.
The remarks came after Iranian President Masoud Pezeshkian vowed that Iran would not back down.
Meanwhile, the US State Department has ordered the departure of American personnel in Saudi Arabia, according to a report by The New York Times citing anonymous officials.
