New Delhi: Indian fuel refiners are bracing for tighter supplies and elevated crude oil prices as the escalating US-Iran conflict threatens to disrupt global energy markets once again, less than a month after an interim ceasefire deal, experts said.
Benchmark Brent crude is already at a five-week high, with its September contract on the Intercontinental Exchange ending at $88.10 a barrel on Friday. Iran's Supreme Leader Mojtaba Khamenei on Saturday released a statement to Iranian state media saying the US’ "repeated breaches of agreements with Iran show that the US president’s signature is worthless and invalid”.
Both sides have stepped up attacks. The US Central Command (Centcom) said that it has completed another round of strikes against Iran on 18 July and successfully hit Iranian military coastal surveillance and air defence facilities, maritime capabilities, and missile and drone storage sites to continue degrading Iranian military capabilities. American military assets also targeted Islamic Revolutionary Guard Corps forces responsible for attacks against the US service members in Jordan on 17 July.
Earlier, Iranian strikes had killed two US soldiers in Jordan. This escalation and volatility will keep the oil prices elevated in the coming days, experts said.
Ponmudi R., chief executive officer (CEO) of Enrich Money, a fintech firm, said: "Looking ahead, volatility across the commodity complex is expected to remain elevated, with developments in the US–Iran conflict continuing to be the single biggest driver of price action. Any further escalation or disruption to shipping through the Strait of Hormuz could extend the rally in crude oil."
With the persistent disruption in the region, energy supplies to India are set to get impacted in the mid-to-long term. India's oil supplies are no longer heavily dependent on West Asia, but elevated crude prices will still strain the import bill, widen the current account deficit, and fuel inflation.
Refiners are expected to rely on Russian oil in the near term and imports from Russia are expected to hover near record levels in July. So far in July, imports from Russia stand at 2.6 million barrels per day (bpd), compared to the record 2.7 million bpd in June, showed data from maritime and commodities tracker Kpler.
“Russian oil will continue to be the mainstay for Indian refiners. Uninterrupted supplies and $4-5 per barrel discounts have been supporting so far. And Indian refineries have become well-configured to process Russian crude,” said an official with a state-run refiner on condition of anonymity.
To be sure, a proposed US Senate bill to impose 100% tariffs on five countries including India over Russian oil imports has sparked concern. However, Russian crude remains critical to India's energy security for now.
“The war in the Persian Gulf remained inconclusive due to intransigence of political leadership accentuated by broader geological rivalry in the region. The 60-day ceasefire agreement between the US and Iran, could not sustain for a longer period, exacerbating tensions and prolonged conflict in the most volatile choke point of the Middle East. The US and Iran must engage in the negotiations to resume the peace process in the Middle East. The peace process should not be bilateral. As Israel is a party to the conflict, Tel Aviv must be included in the negotiation process for a sustained and durable peace process in the region,” said Jajati K. Pattnaik, professor and chairperson, Centre for West Asian Studies, School of International Studies, Jawaharlal Nehru University.
Pattnaik added that the proposed US Senate bill seeks to impose a 100% tariff on India and China over their continued purchases of Russian crude, while exempting European imports of Russian gas. This, he said, reflects a discriminatory approach toward India, China and Russia.
As reported by Mint earlier, India is sourcing most of its energy and other key imports from West Asia through the ports in the UAE and Oman towards the east of the Strait of Hormuz and Yanbu port in Saudi Arabia on the coast of the Red Sea. These alternative ports and the Red Sea route have also come under threat as reports suggested that Iran asked Yemen's Houthi rebels late last week to stand ready to close the Red Sea oil route if the US strikes Iranian power infrastructure.
C. Uday Bhaskar, director at Society for Policy Studies, said: “A return to sustained, high-intensity direct bombing campaigns across Iran (like February-April 2026) is plausible if tactical events around the Hormuz escalate sharply, or a major red line is crossed by way of attacks on infrastructure. What is more likely are episodic spikes, proxy actions and a prickly 'no war, no peace' with periodic strikes. The high risks of miscalculation in a fragmented environment cannot be ignored."
Bhaskar, however, noted that crude prices may not reach the multi-year high scaled in April as “the ecosystem has become more ‘experienced’ in dealing with the volatility.”
“This is an unfortunate pattern with current US policy in West Asia; inflict pain and then agree to talks. The developing nations and their low-income populations will bear the brunt of this cycle that began at the end of February,” he said
India imports 90% of its oil requirements with an annual import bill of over $120 billion. A sustained increase of $1 per barrel in oil prices for a year can lead to an additional ₹18,000 crore in the country's import bill.
Last week, data released by the ministry of statistics and programme implementation showed that India’s retail inflation surpassed the Reserve Bank of India’s 4% midpoint target for the first time since January 2025 and accelerated to 4.38% in June.