Middle East on edge: What does it mean for Indian oil markets?
Times of India
by TOI BUSINESS DESKMarch 2, 2026
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The Middle East is experiencing heightened tensions, raising concerns over its impact on India’s oil markets. As New Delhi imports nearly 88% of its crude oil needs, any disruption in global supplies could significantly increase India’s oil bill and fuel inflation. Recent security concerns around the Strait of Hormuz have already driven global crude prices up by more than 10%, with Brent crude jumping to $80 per barrel and US-traded oil rising to $73. This surge reflects growing market nervousness over potential supply disruptions through one of the world’s busiest oil routes.
The situation is particularly critical for India, which relies heavily on Middle East imports for its crude oil and LPG supplies. Escalating conflicts in the region could lead to further price hikes, affecting not just fuel prices but also everyday consumer products. Crude oil derivatives are used in items like detergents, biscuits, toothpaste, paints, and packaging, making up a significant portion of production costs for FMCG companies (25%) and paint manufacturers (40%). Sustained rises in oil prices could make these essential goods more expensive.
Ajay Bagga, a banking and market expert, noted that around 20-22 million barrels per day—about one-fifth of global oil consumption—passes through the Strait of Hormuz. Even short-term disruptions at this chokepoint can increase insurance premiums, freight charges, and crude benchmarks. Experts predict Brent crude prices could rise to $100-115 per barrel under limited escalation, reaching $120-140 if maritime disruptions occur, and potentially soaring to $150 or more with sustained closure risks.
Higher oil prices would widen India’s current account deficit by 0.4-0.5% of GDP for every $10 increase in crude oil. This could also lift CPI inflation by 30-40 basis points. Sectors like aviation, chemicals, automobiles, paints, and oil marketing companies face pressure if higher costs are not fully passed on to consumers. However, upstream oil firms, defense, IT (due to US dollar hedge), and gold-linked investments
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Originally published on Times of India on 3/2/2026