Brent crude climbed above $90 a barrel on Thursday as the latest escalation between the US and Iran renewed fears of supply disruptions in West Asia, sharpening concerns over India’s import bill, inflation and energy security.
On Thursday, the September Brent contract on the Intercontinental Exchange traded at $92.50 a barrel at 12.40 pm, up 2.33% from previous close. Prices had surged nearly 8% in the previous session to an intraday high of $90.8 a barrel, before settling at $90.74 a barrel.
The latest gains followed US strikes on Iran in retaliation for Tehran’s attacks on American military assets in Jordan, heightening fears that the conflict could spill over into the region’s energy infrastructure.
Al Jazeera reported on Thursday that US forces bombed Iran, striking a residential building on Qeshm Island and killing a couple and their two-year-old child. Explosions were also heard on Kish Island, in Bushehr and at four locations in Khuzestan province, the hub of Iran’s oil industry, it reported.
Separately, Israel’s chief of staff Eyal Zamir said on Wednesday that Israeli troops would not withdraw from occupied territory in southern Lebanon until the country’s security is assured.
Taken together, the US strikes, attacks involving Iran-backed groups in Iraq and Israel’s stance on southern Lebanon suggest regional tensions are unlikely to ease soon.
The prolonged instability has repeatedly rattled energy markets over the past five months. For India, however, the concern extends beyond market volatility. As the world’s third-largest crude importer, sustained high oil prices threaten to widen the import bill, fuel inflation and complicate the macroeconomic outlook.
A sustained $1-a-barrel increase in crude prices over a year could add ₹18,000 crore to India’s import bill, according to Bank of Baroda’s estimates. The country’s annual oil import bill is about $120 billion and accounts for 17-25% of overall merchandise imports.
India’s crude oil import bill for April-June rose to $49.8 billion, up 61% year-on-year on elevated global prices, according to data from Petroleum Planning and Analysis Cell, accounting for 40% of the previous fiscal year’s total oil import bill.
The pressure is already feeding into domestic prices. India’s retail inflation accelerated to 4.3% in June as higher food and fuel costs pushed headline inflation above the Reserve Bank of India’s 4% target midpoint for the first time since January 2025.
Another risk for India is the proposed US Senate legislation that would impose tariffs on the five largest buyers of Russian energy, including India. If enacted, the measure could complicate India’s oil procurement strategy, given that Russian crude now accounts for more than half of the country’s total crude imports. Moscow currently supplies over 50% of India’s total crude imports.
Trade routes remain open
Despite the escalating conflict, shipping through two of the world’s most important energy chokepoints has remained broadly stable, although traffic is still well below pre-war levels.
Data from S&P Global Commodities at Sea showed vessel crossings through the Bab el-Mandeb Strait and the Strait of Hormuz stood at 34 and 16, respectively, on July 28, compared with 32 and 15 a day earlier. Before the war began on 28 February, around 130 vessels a day crossed the Strait of Hormuz, while daily transits through the Bab el-Mandeb had reached 46 vessels before Yemen’s Houthi militia announced shipping restrictions earlier this month.
“Traffic was roughly stable despite increased regional tensions as the US, Iran and their respective allies exchanged fresh attacks on July 28. US Central Command said IRGC forces launched multiple ballistic missiles from Iran in a surprise attack on US forces in the region, while the US and Saudi Arabian forces conducted precision strikes in Iraq against Iran-linked groups allegedly responsible for attacks on US forces and Saudi energy infrastructure in recent days,” the report said.
