Oil Prices Jump More Than 25% in US-Iran War: What It Means for India
From the Editor’s Desk
March 9, 2026
A sharp jump in global oil prices and a sudden fall in the share prices of India’s largest refining companies have followed the widening conflict involving the United States, Israel and Iran. The events themselves are unfolding thousands of kilometres away in the Middle East and in global financial markets. Yet the developments carry direct economic consequences for India because they affect the price and supply of energy on which the country depends.
On March 9, oil prices surged dramatically after the conflict began affecting shipping routes in the Persian Gulf, according Reuters, which reported that the global benchmark price – known as Brent crude and which is a widely used reference price for oil traded around the world – climbed close to 120 U.S. dollars for one barrel of oil. A barrel is the unit used in the oil trade and contains about 159 litres. The increase represented a jump of more than 25 percent in a single day, an unusually large movement in energy markets.
The immediate concern lies in a narrow sea passage called the Strait of Hormuz, which sits between Iran and several Gulf countries and acts as one of the world’s most important energy corridors. Roughly one-fifth of the oil traded internationally travels through this route. Tankers carry crude oil from countries such as Saudi Arabia, Iraq, Kuwait and the United Arab Emirates through this strait before shipping it to buyers across Asia, Europe and other regions.
The ongoing war has raised fears that this passage may become unsafe for shipping. Reports of tanker disruptions and rising security risks have already slowed activity in the region. Markets react strongly to such threats because even a temporary disruption can reduce the flow of oil reaching global markets. Traders therefore rush to secure supplies, which pushes prices upward.
Events inside the region have already begun affecting production. Iraq and Kuwait have started cutting oil output because their ability to export oil through the Strait of Hormuz has weakened. Storage facilities inside Iraq are filling rapidly because oil cannot leave the country at normal rates. If these conditions persist, other producers such as Saudi Arabia and the United Arab Emirates may face similar pressures.
Political developments in Iran have also added uncertainty. Iran has appointed Mojtaba Khamenei to succeed his father Ali Khamenei, who was recently killed in the war, as the country’s supreme leader. Analysts interpret this move as a sign that Iran’s leadership will maintain a hard line during the conflict with the United States and Israel. Financial markets therefore expect tensions in the region to continue, which strengthens the expectation that oil supplies may remain unstable.
India is being impacted because the country imports most of the crude oil it consumes. Petrol, diesel, aviation fuel, fertilisers, plastics and many industrial products rely on crude oil as a basic input.
Shares of India’s largest oil refining companies fell sharply after the surge in global oil prices. Indian Oil Corporation dropped more than six percent in a single trading session. Hindustan Petroleum and Bharat Petroleum fell by more than seven percent.
These companies purchase crude oil from international suppliers and process it into petrol, diesel and other fuels for the domestic market. Investors therefore expect lower earnings during periods of sharp oil price increases.
A prolonged disruption of the Strait of Hormuz could affect not only crude oil shipments but also supplies of liquefied natural gas (LGP) from Qatar. India imports a significant portion of its natural gas from Qatar, which is used for electricity generation and industrial processes. Any disruption there could tighten global gas markets and raise energy costs further.
India’s purchases of oil from Russia may offer some cushion, though the protection is limited. Russian crude became attractive after the Ukraine war because it was sold to Asian buyers at a discount compared with global market prices. Indian refiners increased imports and Russia eventually became India’s largest supplier of crude oil. However, when benchmark prices rise sharply, the price of Russian oil usually rises as well, even if the discount remains. In practical terms this means that Russia can help India maintain supply if Middle Eastern shipments become uncertain, but it cannot fully shield the country from higher global oil prices.
For Indian households and businesses, the significance lies in that chain reaction, as the price of energy remains tied to events in those global supply routes.
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