Iran conflict risks oil surge, rupee pressure

A US-Israel joint strike on Iran and the subsequent Iranian retaliation threaten to disrupt the movement of goods through the Strait of Hormuz, potentially triggering a spike in international crude oil prices and the depreciation of the rupee against the dollar, experts said.

- Rajeev Jayaswal

‘A prolonged conflict could severely impact global energy supplies, particularly affecting India, the world’s third-largest oil consumer after the US and China, these people said, some requesting anonymity. Under US pressure, India has already curtailed its purchase of Russian crude oil.

The conflict is expected to disrupt supplies from the Gulf region and lead to a significant jump in insurance premiums. This places India in a tight spot due to a possible surge in oil prices from a supply crunch, they said. With Russian oil output already dropping because of US sanctions, the conflict may also disrupt the 3 million barrels per day of Iranian crude supplied to various countries, including China.