Crude oil is back in focus as fresh hostilities in West Asia revive concerns over supplies from the region. Brent crude is trading above $95 per barrel after US military strikes on areas along Iran’s southern coast.

Brent crude has risen around 20% from about $79 a barrel in early July to around $95 currently, reversing the easing seen during a month of relative calm in the US-Iran conflict. Renewed US strikes on Iran on 31 August, followed by Iranian retaliation, have pushed supply disruption risks back to the forefront.

Mint explains the volatile price trend, its impact on oil supplies and what it means for the Indian economy.

What has been the recent crude price trend?

Over the past one week, crude prices have traded on a volatile note, in the range of $88-$97 per barrel, amid a sharp escalation in the war in West Asia.

Al Jazeera reported that the US and Iran exchanged the biggest barrage since July and that the death toll from the latest US strikes has reached 18. The US military struck cities and areas along Iran’s southern coast, while Iran retaliated with attacks on US bases across West Asia. The escalation has further clouded oil supply prospects from the region.

Why does crude price volatility matter for India?

Given India's dependency on oil imports, uncertain supplies and price volatility affect the Indian economy. Nearly 90% of India's oil requirement is imported. The import bill in the last fiscal stood at around $123 billion, and an increase of $1 per barrel for a year may raise the country's annual import bill by ₹18,000 crore.

Already, India has imported crude worth $63.4 billion in the first four months of this fiscal (FY27), more than half of the total import bill of FY26. The import bill has grown about 56.5% on a year-on-year basis.

A higher import bill could add to inflationary pressures if the increase in costs is passed on to downstream products and consumers. This, in turn, could affect GDP growth or widen the country's current account deficit.

How could the West Asia war affect India's oil supplies?

Traditionally, West Asia catered to about 60-65% of India's total oil imports, with Saudi Arabia, Iraq and UAE being the key suppliers. These supplies have now declined drastically with the closure of the Strait of Hormuz.

Although a few tankers are coming in through the Strait, which earlier used to handle 20% of global oil trade, and some supplies are coming in through the Red Sea route and Emirati and Omani ports towards the east of the Strait of Hormuz to India, refiners have significantly diversified.

Russia continues as the top supplier, while the US and Venezuela have emerged as other key sources. While availability and supplies are not major concerns for Indian refiners, alternative sources come with higher costs. Supplies from the US and Venezuela involve longer routes, while the dense and viscous nature of the crude from America adds to the cost.

Is India's petroleum consumption also rising?

Being the third largest crude importer and fourth largest refiner in the world, the country is a major petroleum products consumption hub.

Data from the Petroleum Planning and Analysis Cell (PPAC) showed that India's petrol demand in August was 3.82 million tonne, about 7.88% higher on a year-on-year basis, while diesel consumption was up 6.46% to 7 million tonne.

So far this fiscal (April-August), petrol and diesel consumption has increased 6.48% and 4.29%, respectively. With consumption rising, India's crude oil import requirement is expected to grow going ahead.

According to the Organization of Petroleum Exporting countries, India is set to become the major driving force for the world's petroleum products demand by the end of this decade.

What is India doing to strengthen energy security?

India has well diversified its oil imports in the past few years to about 41 countries to ensure energy security and continues to look for newer sources.

On the domestic front, the government and oil marketing companies are eyeing an increase in local oil and gas production. The recent approval by the Union cabinet for the 'Samudra Manthan-National Offshore Exploration Scheme', with an outlay of ₹84,000 crore, aims to boost the hydrocarbon exploration and production sector.

According to the government, India’s eastern and western offshore basins are estimated to hold over 5,600 million metric tonnes of oil equivalent of hydrocarbon potential.

Crude oil is back in focus as fresh hostilities in West Asia revive concerns over supplies from the region. Brent crude is trading above $95 per barrel after US military strikes on areas along Iran’s southern coast.

Brent crude has risen around 20% from about $79 a barrel in early July to around $95 currently, reversing the easing seen during a month of relative calm in the US-Iran conflict. Renewed US strikes on Iran on 31 August, followed by Iranian retaliation, have pushed supply disruption risks back to the forefront.

Mint explains the volatile price trend, its impact on oil supplies and what it means for the Indian economy.

What has been the recent crude price trend?

Over the past one week, crude prices have traded on a volatile note, in the range of $88-$97 per barrel, amid a sharp escalation in the war in West Asia.

Al Jazeera reported that the US and Iran exchanged the biggest barrage since July and that the death toll from the latest US strikes has reached 18. The US military struck cities and areas along Iran’s southern coast, while Iran retaliated with attacks on US bases across West Asia. The escalation has further clouded oil supply prospects from the region.

Why does crude price volatility matter for India?

Given India's dependency on oil imports, uncertain supplies and price volatility affect the Indian economy. Nearly 90% of India's oil requirement is imported. The import bill in the last fiscal stood at around $123 billion, and an increase of $1 per barrel for a year may raise the country's annual import bill by ₹18,000 crore.

Already, India has imported crude worth $63.4 billion in the first four months of this fiscal (FY27), more than half of the total import bill of FY26. The import bill has grown about 56.5% on a year-on-year basis.

A higher import bill could add to inflationary pressures if the increase in costs is passed on to downstream products and consumers. This, in turn, could affect GDP growth or widen the country's current account deficit.

How could the West Asia war affect India's oil supplies?

Traditionally, West Asia catered to about 60-65% of India's total oil imports, with Saudi Arabia, Iraq and UAE being the key suppliers. These supplies have now declined drastically with the closure of the Strait of Hormuz.

Although a few tankers are coming in through the Strait, which earlier used to handle 20% of global oil trade, and some supplies are coming in through the Red Sea route and Emirati and Omani ports towards the east of the Strait of Hormuz to India, refiners have significantly diversified.

Russia continues as the top supplier, while the US and Venezuela have emerged as other key sources. While availability and supplies are not major concerns for Indian refiners, alternative sources come with higher costs. Supplies from the US and Venezuela involve longer routes, while the dense and viscous nature of the crude from America adds to the cost.

Is India's petroleum consumption also rising?

Being the third largest crude importer and fourth largest refiner in the world, the country is a major petroleum products consumption hub.

Data from the Petroleum Planning and Analysis Cell (PPAC) showed that India's petrol demand in August was 3.82 million tonne, about 7.88% higher on a year-on-year basis, while diesel consumption was up 6.46% to 7 million tonne.

So far this fiscal (April-August), petrol and diesel consumption has increased 6.48% and 4.29%, respectively. With consumption rising, India's crude oil import requirement is expected to grow going ahead.

According to the Organization of Petroleum Exporting countries, India is set to become the major driving force for the world's petroleum products demand by the end of this decade.

What is India doing to strengthen energy security?

India has well diversified its oil imports in the past few years to about 41 countries to ensure energy security and continues to look for newer sources.

On the domestic front, the government and oil marketing companies are eyeing an increase in local oil and gas production. The recent approval by the Union cabinet for the 'Samudra Manthan-National Offshore Exploration Scheme', with an outlay of ₹84,000 crore, aims to boost the hydrocarbon exploration and production sector.

According to the government, India’s eastern and western offshore basins are estimated to hold over 5,600 million metric tonnes of oil equivalent of hydrocarbon potential.