Brent crude touched $100 a barrel on Thursday, its highest since May 22, as disruptions across the Strait of Hormuz, Red Sea and Black Sea tightened supplies, threatening to raise India’s crude, freight, tanker and insurance costs. Unless the situation de-escalates soon, India’s fiscal pressures, which seemed to abate after the now-aborted US-Iran ceasefire deal could re-emerge.
Brent rose 6.09% to $99.80 a barrel on July 23. The benchmark has gained 35.34% over the past month and 44.26% from a year earlier, as supply risks widened.
The latest jump followed attacks claimed by Iran-backed Houthi militants on two Saudi oil tankers in the Red Sea. Risks were compounded by continuing attacks around Hormuz, renewed US strikes on Iran and Kazakhstan’s decision to halt crude exports through the Caspian Pipeline Consortium terminal.
The pressure is already visible in India’s crude costs. The Indian basket surged $24.98 a barrel, or 36.6%, in 19 days, from $68.21 on July 3 to $93.19 on July 22. The latest spike in Brent crude prices will reflect on the Indian basket in the coming days.
The Reserve Bank of India staff said in the latest monthly bulletin that the country has navigated external uncertainties and supply chain pressures well, a view echoed by many independent economists.
Rerouting and Escalating Freight
For India, the impact of the latest supply constraints will also come through longer voyages, higher tanker rates and rising insurance costs. Saudi cargoes from Yanbu may have to travel through the Suez Canal and then around the Cape of Good Hope, adding about two weeks compared with the usual three-four-day journey.
An estimated 11.17 million barrels per day of West Asian production is shut in. Saudi Arabia accounts for 3.5 million b/d, Iraq 3 million, Kuwait 1.8 million, Qatar and Iran 1.1 million each, the UAE 0.5 million and Bahrain 0.17 million.
“If the voyage timeline increases by two weeks, the cost of freight for energy imports from West Asia, primarily Saudi supplies, may surge 30-50%,” said Prashant Vashisht, senior vice-president and co-group head, corporate ratings, ICRA.
Vessel shortages could raise shipping costs by 50-80% as owners avoid risky passages. Supplies from Russia, South America and Africa may add 15-20 days, while rerouting around the Cape or sourcing US crude could extend voyages by 25-30 days.
The additional freight, bunker fuel and insurance burden could reach $2.5-5 million per voyage for a very large crude carrier carrying nearly two million barrels. This may add $2-4 a barrel to India’s landed crude cost. For some rerouted West Asian cargoes, the combined impact could reach $6-8 a barrel.
The Drewry World Container Index stood at $4,547 per 40-foot container and the key Baltic index near $3,852, both up around 150% since the conflict began in 2026, reflecting higher fuel and insurance costs.
War-risk premiums on high-risk Gulf transits have risen 200-300%, while some voyages have recorded increases exceeding 1,000%. Rates for the riskiest journeys have climbed from 0.2-0.5% of vessel value to 3-5%.
“Even without a formal closure, insurers and reinsurers are likely to reassess the risk, leading to higher premiums, tighter underwriting and reduced capacity,” said Amit Goel, Director, Equirus Raghnall Insurance Broking.
Fiscal Pressure
India’s crude import bill reached $49.8 billion in April-June, up 61% year-on-year and equal to about 40% of last fiscal’s total oil import bill. A sustained $1-a-barrel rise for a year could add about ₹18,000 crore to the import bill.
Kpler said confirmed crude transits through Hormuz had fallen 75%, leaving more oil inside the Gulf. “With pressure building on both major export corridors, market attention is shifting from concerns over excess supply to the growing risk of prompt crude tightness,” it said.
At least seven vessels have changed course to avoid transiting through the Bab al Mandeb Strait in light of the Houthi blockade on Saudi ports.
The squeeze could also affect Russian crude, which supplied nearly half of India’s June imports. Longer routes, tanker scarcity and higher insurance could add around $2 a barrel to transport costs.
