Brent prices spiked to a seven-month high of $73 a barrel on Friday ahead of massive US and Israeli air strikes on Iran over the weekend which has killed Ayatollah Ali Khamenei, the nation’s supreme leader, besides top officials of the defence establishment. Hundreds of civilians, including children, have been killed and wounded in these ongoing major combat operations targeting Iran Revolutionary Guard Corps (IRGC) command centres, missile launch sites, air defence systems, and nuclear facilities.
US President Donald Trump has vowed to eliminate Iran’s nuclear programme and bring about regime change. To Iran’s threat that the US has to pay the price for “crossing the red line”, Trump retorted “if they do, we will hit them with a force that has never been seen before”. Iran’s president, the head of the judiciary, and a jurist of the Guardian Council are now in charge during this transition period.
Hormuz Chokepoint
Tehran has retaliated with a barrage of medium-range ballistic missile strikes targeting US bases in Qatar, Bahrain, Kuwait, and of course Jerusalem and Tel Aviv, triggering a full-blown conflict in West Asia. Iran will be also aided in its retaliatory drive by its various regional militant proxies.
Oil markets are bound to be jittery on Monday, especially after messages were reportedly transmitted by the IRGC saying “no ship is allowed to pass the Strait of Hormuz”, through which a fifth of global seaborne traded oil flows daily. Prices would zoom upwards if this chokepoint is indeed blockaded. Last year, the 12-day war between Israel and Iran saw Brent spot prices jump more than 20% to $80 a barrel before retreating as tensions eased.
Oil prices have been on the boil this year, climbing 17% since December to $73 a barrel initially on concerns in Venezuela and more recently due to the massive build-up of US forces in the region, the highest since 2003, due to tensions with Iran. The outlook on global oil prices could be much worse if US and Israeli strikes also disrupt Iran’s oil production as it is the fourth-largest Organization of Petroleum Exporting Countries (OPEC) producer, generating 3.37 million barrels per day in 2025.
Disruption would straightaway take out 4.2% of global crude supplies. OPEC+ agreed to a modest oil output boost of 206,000 barrels per day on Sunday. Analysts, however, said OPEC+ has a history of raising oil output to cushion disruptions but the group currently has little spare capacity to add to supply, except for its leader Saudi Arabia and the United Arab Emirates which will also struggle to export oil until navigation in the Gulf returns to normal.
The likelihood of a spike in oil prices amidst a broader regional conflict is bad news for India which depends massively on energy imports. India is also concerned about the safety of its 10-million strong diaspora in the region and has urged dialogue and diplomacy to de-escalate tensions.
India’s Energy Security
India is also seriously impacted if the Strait of Hormuz closes as more than 52% of its monthly crude imports passes through this artery. Crude volumes jumped to 2,911 thousand barrels per day in February (month till date), up from 1,860 thousand barrels per day in September 2025, according to FE. Due to the strikes on Iran, our refiners are naturally putting in place contingency sourcing strategies, including the possibility of turning back to higher volumes of deeply discounted Russian crude if West Asian supplies are seriously disrupted. The prospect of costlier oil only underscores the imperative of making determined efforts to step up relative self-sufficiency in domestic oil production over the medium term to bolster our energy security.