Will the Iran-Israel conflict push petroleum prices in India? 

The Biz Reporter Analysis
Srinagar, April 14, 2024: Crude oil prices are once again inching towards the $100 per barrel mark, fueled by the escalating tensions between Iran and Israel. On April 13, Iran launched attacks against Israel, raising concerns about potential supply disruptions from the Middle East, a region that accounts for a significant portion of the world’s oil supply.
For India, a country heavily dependent on oil imports, with over 85% of its crude requirements sourced from other nations, these rising prices could have far-reaching implications. The retail prices of petrol and diesel in India are directly linked to international oil prices, making the country highly sensitive to fluctuations in the global market
On April 12, Brent crude futures settled at $90.45 per barrel, marking a 1% increase due to the escalating tensions between Iran and Israel. Pankaj Sharma, India’s oil secretary, had previously expressed concerns about rising crude oil prices on April 2, stating that they were a cause for worry.
While Indian oil marketing companies (OMCs) had slashed petrol and diesel prices by Rs 2 per litre on March 14, when crude oil prices were hovering around $80 per barrel, the recent surge in prices has dimmed prospects of further reductions. Sharma stated that if oil prices remain elevated for another month, OMCs would take appropriate action on retail fuel prices.
Analysts at JPMorgan Chase & Co had forecasted in late March that oil prices could reach $100 by September 2024, citing production cuts by Russia, a major oil supplier, and the Organization of Petroleum Exporting Countries and its allies (OPEC+).
The growing geopolitical rifts in the Middle East and OPEC+’s strong compliance with crude oil production targets are expected to buoy prices in the second quarter of 2024, according to brokerage Sharekhan.
US President Joe Biden has condemned the attacks by Iran and pledged support for Israel’s security, vowing to convene G7 leaders to coordinate a united diplomatic response, further escalating tensions and potentially impacting oil prices.
The continuous rise in crude oil prices since late March has diminished expectations of further fuel price cuts by OMCs in India. SM Vaidya, the chairman of Indian Oil, had stated that a decision on price reductions would be made considering the volatility in crude oil prices, as the company awaits a more stable trend.
With Iran’s renewed efforts to pitch India to restart crude supplies should US sanctions be lifted, the relationship between the two countries could play a crucial role in India’s efforts to diversify its oil sources and mitigate the impact of high prices.
As the situation in the Middle East remains volatile, global oil markets are bracing for potential supply disruptions, and import-dependent nations like India are closely monitoring developments, weighing their options to ensure energy security and affordable fuel prices for their citizens.