Winning Bizness Desk
Mumbai.Global oil and gas markets have witnessed a sharp surge following fresh Iranian strikes on key energy installations in the Gulf region on March 19. The escalation has pushed crude oil and natural gas prices up by as much as 30 percent, triggering fears of higher fuel costs in India. The situation has worsened after Iran targeted Qatar’s main LNG facility, raising serious concerns over supply disruptions. With India heavily dependent on imports, the ripple effects are expected to hit household budgets in the coming days.
Crude oil jumps sharply after conflict escalation
Crude oil prices have recorded a steep rise since the conflict intensified. Brent crude, which was trading below 73 dollars per barrel before the war, has now climbed close to 114 dollars per barrel. The Indian basket, which reflects the average cost of crude imported by India, has surged even higher to around 146 dollars per barrel. This spike indicates the pressure building on oil-importing nations like India.
Crude oil pricing globally is based on three major benchmarks:
- Brent crude from the North Sea, which drives nearly two-thirds of global trade
- WTI crude from the United States, known for its high quality
- OPEC basket, a mix of crude produced by Gulf nations
India imports oil from countries like Iraq, Saudi Arabia, Russia and the UAE, and the combined average of these forms the Indian basket.
Gas prices soar across Europe markets
The impact of the Iranian strike on Qatar has been most visible in European gas markets. The Dutch TTF benchmark, a key indicator of gas prices in Europe, surged nearly 30 percent to touch 70 euros before settling around 63 euros with a 16 percent gain.
In the United Kingdom, wholesale gas prices have jumped dramatically:
- Prices reached 171.34 pence per therm
- This is the highest level since January 2023
- Rates have surged nearly 140 percent since the war began
- Earlier, prices were at 71.13 pence per therm
Fuel and LPG prices may rise in India
India, which imports around 85 percent of its crude oil and over half of its gas needs, is highly vulnerable to such global shocks. With the Indian basket touching 146 dollars per barrel, oil companies may find it difficult to sustain current retail fuel prices.
- Petrol and diesel prices may rise by 10 to 15 rupees per litre
- LPG cylinder prices could increase due to supply shortage
- Oil companies have already raised LPG prices by 60 rupees recently
Impact likely on food and daily essentials
The rise in crude oil prices does not just affect fuel but also impacts a wide range of products. Diesel becoming costlier will push up transportation expenses, leading to higher prices of fruits, vegetables and grains. Additionally, crude oil is a key raw material in:
- Paints and plastics
- Fertilisers
- Pharmaceutical products
This cascading effect is expected to strain household budgets and increase overall inflation.
Supply disruptions from key global choke points
Two major factors have triggered this sharp spike in prices. First, Iran’s drone strikes have damaged Qatar’s Ras Laffan LNG facility, the world’s largest LNG hub responsible for nearly 20 percent of global supply. The plant has been temporarily shut, choking supply lines.
Second, the Strait of Hormuz, a critical 167-km waterway connecting the Persian Gulf to the Arabian Sea, has become unsafe due to the conflict. This route handles nearly 20 percent of global petroleum trade. India depends on this passage for about:
- 50 percent of its crude oil imports
- 54 percent of its LNG supplies
With tankers avoiding the route, supply fears have intensified, keeping global energy markets on edge.
