New Delhi, March 3 Crude oil traded about 1 per cent higher on on Tuesday, showing signs of a temporary steading following over 10 per cent surge in previous session amid escalating conflict in West Asia and concerns about supply through the Strait of Hormuz.
The US crude futures rose 1.4 per cent to $72.23. Brent crude gained 1.87 per cent to trade at $79.2 per barrel in early session on Tuesday.
Iran's retaliatory strikes on oil and gas facilities have heightened fears of supply disruption, lifting oil prices and stoking inflation worries. Tehran reportedly targeted oil and gas infrastructure in Saudi Arabia and threatened shipping in the strategic Strait of Hormuz.
Analysts said that the announcement from the US administration on steps to address rising domestic energy prices helped temper the panic that drove Monday’s spike. US Secretary of State Rubio on Monday informed that Treasury Secretary Scott Bessent and Energy Secretary Chris Wright would announce plans on Tuesday to address rising energy prices.
However, the threat to shipping through the Strait of Hormuz — a chokepoint for global oil flows — continued to underpin prices, market participants said, adding that India would likely be able to absorb a temporary closure of Hormuz.
However, a prolonged closure of the strait will require India to diversify, when the country is already exploring alternative suppliers, including Russia, Africa and South America, according to multiple reports.
Investment bank Morgan Stanley has said Brent crude prices could touch $120 per barrel if a full-scale conflict in West Asia leads to sustained disruption of oil flows through the Strait of Hormuz.
Another recent report said that Brent crude could climb above $90 per barrel with disruption at the strait or exceed $100 per barrel in a broader regional conflict.
A limited conflict could add $5–$10 per barrel, while direct damage to Iranian oil infrastructure could add $10–$12 per barrel, it forecasted.
Every $1 rise in crude increases India’s annual import bill by about $2 billion, putting pressure on the trade balance, the report further said.
Around 20 per cent of global oil flows transit the Strait of Hormuz, with over 40 per cent of India’s crude imports using the route.
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