New Delhi: Crude prices jumped over 6% on Wednesday amid fresh attacks on Iraq by the US and Saudi Arabia and Iran’s strikes on US military assets in Jordan, reviving concerns over a wider conflict in West Asia.
Around 7 PM, the September contract of Brent on the Indian Energy Exchange was trading at $89.44 a barrel, up 6.36% from its previous close.
The attacks, which have resumed after a gap of four days, have resulted in about 20 casualties in Iraq.
Adding to the supply concerns, the US Senate advanced a bill to impose more restrictions and tariffs on the top five buyers of Russian energy, including India.
The sanctions bill, if implemented, would provide US President Donald Trump the authority to impose heavy sanctions on Russian officials as well as up to 100% tariffs on nations like India and China to deter them from buying Russian oil and gas.
This is significant for India as Russian oil currently accounts for over 50% of India’s total crude imports.
India’s Russian purchases
Despite the proposed legislation, Indian refiners are expected to continue procuring from Russia in the near term.
“Refiners are procuring oil from non-sanctioned entities in Russia and it would continue. It will have to be looked at how the developments evolve regarding the bill in US. Right now, it is not a matter of concern,” said an official on the condition of anonymity.
Queries mailed to the union ministries of petroleum and natural gas and external affairs, Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd and Indian Oil Corporation Ltd were not immediately answered.
India imported about 2.6 million barrels per day of Russian crude in July, accounting for more than half of its total crude imports. However, Russian suppliers are currently offering little or no discount amid tightening global supplies.
Rising crude prices are a concern for India, which imports nearly 90% of its oil requirements.
A sustained $1 per barrel increase in crude prices over a year could add ₹18,000 crore to India’s import bill. The country’s annual oil import bill of around $120 billion, accounting for 17-25% of overall merchandise imports.
India’s crude oil import bill for April-June has reached $49.8 billion, up 61% year-on-year on elevated global prices, accounting for 40% of the previous fiscal year’s total oil import bill.
Already India’s retail inflation increased to 4.3% in June, due to higher food and fuel prices surpassing Reserve Bank of India’s 4% midpoint target for the first time since January 2025.
The Indian crude basket, which denotes the cost of import for Indian refiners stood at $84.26 per barrel as 28 July, according to data from the Petroleum Planning and Analysis Cell.
The International Energy Agency’s oil market report for July noted that supplies are expected to decline by an average of 3.7 million barrels per day to 102.6 million barrels in 2026, contingent on a swift de-escalation of renewed hostilities.
“If transit volumes improve, oil supply will expand by 7.5 mb/d next year,” it said.
