Oil hits one-month high as U.S., Iran step up attacks in Strait of Hormuz
Global crude oil benchmarks rose to their highest levels in about a month as the US and Iran stepped up attacks in and around the Strait of Hormuz
Brent crude rose to roughly $84-86 per barrel and US WTI crude to roughly $79-80 per barrel, the highest since mid-June
The price rise unwinds part of the decline that followed a memorandum of understanding signed on 17 June, which had provided for a toll-free reopening of the Strait to commercial shipping for 60 days and an end to the naval blockade
The renewed attacks have again clouded the outlook for uninterrupted energy flows through the Strait
Oil Price Benchmarks — Brent vs WTI and Relevance for India
Global crude oil trade is priced off a small number of benchmark grades. Brent crude (North Sea) is the reference price for roughly two-thirds of internationally traded oil, including nearly all of India's crude imports, while West Texas Intermediate (WTI) is the primary US domestic benchmark.
Key Details
- India's crude basket is priced predominantly off Brent-linked formulas, since the bulk of its imports (Gulf, West Africa, Russia via Urals-Brent-linked pricing) reference Brent rather than WTI
- Domestic retail fuel pricing in India has followed a dynamic daily-revision mechanism since June 2017, linked to a trailing average of international benchmark prices and the rupee-dollar exchange rate
- A sustained rise in Brent widens India's oil import bill, pressures the Current Account Deficit (CAD), and can feed into retail inflation (CPI) with a lag through transport and input costs
The reported rise in Brent to a one-month high, driven by the Hormuz conflict, directly raises India's import cost per barrel, since Indian crude purchases are benchmarked to Brent rather than WTI.
India's Strategic Petroleum Reserves (ISPRL) and Energy Security
India maintains emergency crude oil reserves through Indian Strategic Petroleum Reserves Limited (ISPRL), incorporated in 2004 as a wholly-owned subsidiary of Indian Oil Corporation under the Ministry of Petroleum and Natural Gas, distinct from the operational/commercial stocks held by refiners.
Key Details
- ISPRL operates underground strategic storage at three coastal locations: Visakhapatnam (1.33 million metric tonnes), Mangaluru (1.5 MMT) and Padur (2.5 MMT) — a combined capacity of 5.33 MMT, equivalent to about 9.5 days of India's crude consumption
- Adding refiners' own mandated commercial stocks, India's total reserve cover is estimated at around 74 days of net imports
- The International Energy Agency (IEA) requires full member states to hold reserves equal to at least 90 days of net oil imports; India has been an IEA Associate member since 2017 and is not bound by this requirement, but a "progressive roadmap" toward 90-day coverage has been discussed as India explores full IEA membership
- India is expanding SPR capacity through Phase II (additional caverns at Padur and Bikaner) and Phase III, aimed at narrowing the gap with the IEA's 90-day benchmark
A Hormuz-driven price spike is precisely the scenario strategic reserves are meant to cushion — India's current ~74-day combined cover provides a buffer, but remains short of the IEA's 90-day norm that full members are expected to maintain during such supply-side shocks.
India's Crude Import Dependency and Macroeconomic Transmission
India imports the large majority of its crude oil requirement, making it structurally exposed to Hormuz-linked price and supply shocks despite growing supplier diversification (including increased Russian crude sourcing since 2022).
Key Details
- India's crude oil import dependency exceeded 90% in FY26 (April 2025-March 2026), per industry estimates, up from a range of roughly 80-85% in earlier years, as domestic crude production has declined from a peak of 35.9 million tonnes (FY12) to around 26 million tonnes (FY26)
- Oil and gas import costs are a major component of India's Current Account Deficit; sustained Brent price increases directly widen the trade and current account gap
- The government's response toolkit in such episodes includes SPR releases (in coordination with, though not obligation to, the IEA), diversifying crude suppliers, and adjusting excise duty on fuels to manage retail price pass-through
With import dependency above 90%, India is highly sensitive to the kind of Brent price spike reported here, reinforcing the strategic logic behind both diversified crude sourcing and continued SPR capacity expansion.
- Brent crude: ~$84.80/barrel (up ~1.8% on the day), highest level since 15 June
- WTI crude: ~$79.84/barrel (up ~2.2% on the day)
- India's crude import dependency: exceeded 90% in FY26 (up from ~80-85% in earlier years)
- India's ISPRL strategic reserve capacity: 5.33 MMT across Visakhapatnam (1.33 MMT), Mangaluru (1.5 MMT) and Padur (2.5 MMT) — about 9.5 days of cover
- Combined SPR + refiners' commercial stock cover: approximately 74 days of net imports
- IEA full-member requirement: minimum 90 days of net oil import reserves; India is an IEA Associate (since 2017), not bound by this threshold
- Domestic crude production: fell from a peak of 35.9 million tonnes (FY12) to around 26 million tonnes (FY26)