Oil prices edged higher on Wednesday as escalating tensions in West Asia continued to disrupt supply sentiment, with Brent crude rising $1.1, or 1.4%, to $82.52 a barrel by 11:43 GMT (17:13 IST), after closing Tuesday at its highest since January 2025. US West Texas Intermediate (WTI) crude rose 40 cents, or 0.5%, to $74.96, after settling at its highest since June.
The rise came after US-Israeli strikes on Iran disrupted supplies, although the pace of the rally slowed after US President Donald Trump suggested the US Navy could escort vessels through the Strait of Hormuz — one of the world’s most important energy chokepoints and a critical supply route for India’s crude imports.
As the conflict dragged on, India has been monitoring the situation closely and is exploring alternative crude sources.
Reuters reported, citing an industry source, that Russia is ready to divert oil to India to offset West Asia supply disruptions, with about 9.5 million barrels of Russian crude in vessels near Indian waters and able to arrive within weeks.
FE reported on Tuesday that the floating Russian crude could offer India a lifeline as Gulf routes choked. According to Kpler data, approximately 24 million barrels of Russian crude are currently floating across the Arabian Sea and can provide a critical supply buffer.
For India, which is among the world’s largest crude importers, the corridor remains strategically critical.
The country currently imports around 89% of the crude oil required for domestic processing, making it highly exposed to global oil price movements and geopolitical developments.
Chokepoint Crisis
According to a new report by CareEdge Ratings, around 40% of India’s crude oil imports transit through the Strait of Hormuz, highlighting the country’s dependence on Gulf supply routes.
Data cited in the report shows West Asia accounted for 46.9% of India’s crude imports during April-January of FY26, followed by Eurasia at 34.6%, with smaller shares sourced from North America, Africa and South America.
CareEdge cautioned that even a temporary disruption in the Strait could have a sharp impact on global crude prices and supply flows.
“A full closure of the Strait of Hormuz, even for a few weeks, could push Brent crude prices in the range of $100–110/bbl and lead to LNG shortage across Asia and Europe. Such a disruption would also drive up marine insurance premiums, transit times for goods, and transportation costs,” said Puneet Kansal, director, CareEdge Ratings.
Macroeconomic Fallout
Higher crude prices could also have macroeconomic implications for India.
“A combination of sustained geopolitical tensions in the Middle East, Russia-Ukraine conflict, and US worldwide tariffs is expected to exert pressure on the inflation rate, supply chains and trade flows. Rising crude prices will increase India’s current account deficit, weaken the rupee, and raise hedging costs for import-oriented firms,” said Priti Agarwal, senior director, CareEdge Ratings.
The report noted that the challenge is more serious for supplies of liquefied petroleum gas (LPG) and liquefied natural gas (LNG), where India’s dependence on the Strait of Hormuz is relatively higher.
Beyond macroeconomic indicators, several sectors of the Indian economy could face operational pressures. Industries that rely heavily on petroleum-based inputs — including aviation, chemicals, paints, tyres and logistics — may see pressure on profitability due to higher raw material costs, elevated logistics and insurance expenses, and increased working capital requirements.