The story to date: International oil markets are bracing for a possible upward value shock as commerce resumes Monday (March 2, 2026) amidst escalation of hostilities in West Asia, as Israel and its ally United States (U.S.) launched air strikes towards Iran on Saturday (February 28, 2026), with Tehran appearing in retaliation.
Extra importantly for the oil market, Tehran has introduced the closure of Strait Of Hormuz, which accounts for roughly one-fifth of the worldwide crude oil movement, following the demise of their supreme chief Ayatollah Ali Khamenei. At shut of commerce on Friday (February 27, 2026; 7:29 p.m. GMT), Brent Crude futures for April had been buying and selling close to flat at $72.52 per barrel.
Why is the strain creating panic about oil costs?
The Strait of Hormuz is a necessary chokepoint that connects the Persian Gulf with the Gulf of Oman and Arabian Sea. For perspective, chokepoints are slim channels alongside broadly used international sea routes which can be utilised for transporting oil by means of sea. The closure of a chokepoint, even when for a brief interval, can translate to potential delays in provide, discount in site visitors and rise in delivery and insurance coverage prices. All of it culminating into elevated value of crude. Although alternate options exist for some chokepoints, however they might entail vital enhance in transit occasions.
The closure of the Strait would translate to New Delhi being barred entry to Suez Canal and the Purple Sea. That is anticipated to have price and time escalations for Indian exporters utilising the maritime route.
Additional, the Paris-headquarterd Worldwide Power Affiliation (IEA) noticed in June final yr, that the Strait served because the exit route from the Gulf for roughly one-fourth of the worldwide oil provide together with from main oil-producing nations Saudi Arabia and United Arab Emirates alongside Kuwait, Qatar, Iraq and Iran itself.
From the bigger perspective of commerce, S.C. Ralhan, President of the Federation of Indian Export Organisations (FIEO), stated, “If diversions develop into extended, shipments might more and more should reroute through the Cape of Good Hope, including an estimated 15–20 days to transit time for Europe and america.”
He added that heightened geopolitical dangers might end in “larger marine insurance coverage premiums, additional addingv to transaction prices for exporters”.
How has India utilised the Strait of Hormuz?
Based on Prashant Vasisht, Senior Vice President and Co-Group Head, at ranking company ICRA, about half of India’s crude oil and 54% of liquified pure gasoline (LNG) imports had been routed by means of the Strait in monetary yr 2025.
“For Indian refiners whereas crude oil may very well be sourced from alternate places such because the US, Africa, South America, nevertheless elevated power costs may result in a hovering import invoice,” he states, including, “Elevated crude oil costs would average the advertising and marketing margins and profitability of oil advertising and marketing corporations.”
How is the world assessing the uncertainty?
Based on analysts at S&P International Commodities at Sea (CAS), exercise within the strait has fallen by roughly 40-50% as 7.30 p.m. coordinated common time (UTC) on February 28. It added that the majority vessels appeared to flee the strait on the time.
Fatih Birol, Government Director on the IEA wrote on social media that the power affiliation was “actively monitoring occasions within the Center East & the potential implications for international oil & gasoline markets and commerce flows.”
Nevertheless, he maintained, “Markets have been properly provided so far.”
Additionally, important to notice, in keeping with a report from JM Monetary, brent crude had already risen to a seven-month excessive of about $72.8 per barrel as fears a few potential strike mounted earlier.
“Situation evaluation suggests restricted retaliation may add $5–10 per barrel; direct harm to Iranian oil infrastructure may add $10–$12 per barrel; Hormuz disruption may push costs above $90 for each barrel; and a broader regional conflict may drive crude past $100 per barrel,” their be aware learn.
What does it imply again residence?
Based on Aditi Nayar, Chief Economist at scores company ICRA, the unfolding escalation in West Asia and its extent, “would have a bearing on India’s macros, together with issues just like the influence of gasoline costs on inflation and the dual deficits, as properly remittances.”
Printed – March 01, 2026 05:36 pm IST
