Should India brace for petrol, diesel rate hikes amid US intervention in Middle East?

Are big hikes in petrol and diesel rates on the cards? Amid tensions in the Middle East, with the US launching strikes on three Iranian nuclear targets, all eyes are on any fluctuation in crude oil prices from hereon. Iran's Parliament, known as the Majlis, has given the nod to the closure of the Strait of Hormuz in response to the US attacks, according to foreign media. About one-fifth of the world’s crude oil supplies pass through this sea route. Given the latest US-Israel-Iran situation, markets are abuzz with growing concerns over whether transporting crude oil will become costlier, eventually leading to sharp hikes in fuel prices for economies including India.

What Petroleum Minister Hardeep Singh Puri has said on oil supplies amid Strait of Hormuz closure concerns

Petroleum and Natural Gas Minister Hardeep Singh Puri has said that the government is monitoring the crude oil situation closely and will consider every possible step to ensure sufficient supplies of the commodity in the domestic market.

Under the leadership of PM Narendra Modi, "we have diversified our supplies in the past few years and a large volume of our supplies do not come through the Strait of Hormuz now. Our OMCs have supplies of several weeks and continue to receive energy supplies from several routes. We will take all necessary steps to ensure stability of supplies of fuel to our citizens," wrote Puri on X (formerly Twitter).

PM Modi's government consistently reviewing Middle East situation: Hardeep Singh Puri

"As far as the global situation today is concerned, the escalation of tensions in the Middle East was not entirely unexpected. We had foreshadowed this. The government, under the PM, has been consistently reviewing the situation, including the possibility of the closure of the Strait** of Hormuz," Puri told news agency ANI.

Out of the 5.5 million barrels of crude oil that India consumes daily, about 1.5–2 million come through the Strait of Hormuz, according to Puri.

"We import roughly 4 million barrels through other routes," said the minister, adding that most of the OMCs have oil stocks sufficient for the next three weeks.

"One of them has 25 days' stock. We can increase the supply of crude through other routes... We are in touch with all possible actors... There is no cause for any alarm on this score," he told ANI.

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What analysts say on crude oil and the Middle East

"The ongoing hostilities between Israel and Iran have heightened supply concerns across the Middle East, a region critical to global oil exports. According to the US Energy Information Administration (EIA), crude stockpiles dropped by 11.5 million barrels last week, significantly higher than the anticipated 2.3 million-barrel decline. Despite touching the highest levels in four and a half months, oil prices pared gains late in the session after the US President signaled that a decision on potential intervention in the conflict could come within two weeks," said Rahul Kalantri, VP Commodities at Mehta Equities.

According to Kalantri, crude oil is seen having support at $74.20–73.40 per barrel and resistance at $75.65–76.20 per barrel on Monday. In rupee terms, he added, crude oil has support at Rs 6,400–6,320 and resistance at Rs 6,580–6,690.