Will rising tensions between US-Israel and Iran threaten crude oil supply through the Strait of Hormuz, putting India's fuel prices, imports, and economic stability at risk?
The United States has encouraged India to purchase Russian oil already at sea to mitigate supply shortages and price increases amid the West Asia conflict, according to Energy Secretary Chris Wright. This move is described as a short-term effort to stabilise the market without altering Washington's policy towards Russia.
India will restrict crude oil purchases from Russia as part of an agreement reached with the US in exchange for lower trade tariffs, sources said, adding imports will continue for now by refiners such as Nayara Energy, which have no other alternative source. US President Donald Trump announced overnight that the United States will cut the reciprocal tariff on imports of Indian goods to 18 per cent from 25 per cent under a broader bilateral understanding.
The Indian rupee fell to a record low against the US dollar due to rising crude oil prices, foreign institutional investor selling, and weak domestic equity market sentiment.
'Oil is still well below its all-time highs, and the world is gradually running out of known reserves.'
External Affairs Minister S Jaishankar discussed the West Asia conflict and its impact on energy supplies with his Russian counterpart Sergey Lavrov and EU's Foreign Policy chief Kaja Kallas.
Where are the most oil reserves in the world? Who owns them? Find out!
Indian benchmark equity indices Sensex and Nifty experienced a significant crash in early trade, triggered by a sharp increase in crude oil prices and escalating tensions in the Middle East.
Donald Trump defends the recent surge in global oil prices, arguing it's a necessary short-term cost to eliminate Iran's nuclear threat and ensure global security.
India is closely monitoring developments related to a proposed American legislation that seeks to impose up to 500 per cent tariff on countries procuring Russian crude oil.
Bharat Electronics, Reliance Industries, Mahindra & Mahindra, Larsen & Toubro, InterGlobe Aviation, ICICI Bank and UltraTech Cement were among the other major gainers. Axis Bank, Infosys, Tata Consultancy Services, Trent and Titan were the laggards.
A fall in the Nifty 50 to around 19,000 is not impossible, but that would likely require nuclear options to be exercised.
Brent crude prices surged sharply on Monday, rising by more than 25 per cent to $116.5 per barrel, amid the ongoing conflict in West Asia, which has made crude prices bullish.
Rupee slumped 69 paise to an all-time low of 92.18 against the US dollar in early trade on Wednesday, as a sharp spike in crude oil prices amid geopolitical tensions following the escalation of the US-Iran conflict weighed on investor sentiment.
24 Indian-flagged vessels with 677 Indian seafarers were currently located west of the Strait of Hormuz, and four vessels with 101 Indian seafarers were stationed east of the strategic waterway.
The Indian rupee weakened against the US dollar due to rising crude oil prices, geopolitical tensions in the Middle East, and foreign fund outflows.
From the 30-share blue-chip pack, Zomato cracked nearly 7 per cent. Power Grid, Adani Ports, Tata Steel, NTPC, Tata Motors, Tech Mahindra, Mahindra & Mahindra, Asian Paints, Sun Pharma and UltraTech Cement were the other major laggards. In contrast, Axis Bank, Hindustan Unilever, Tata Consultancy Services and IndusInd Bank were the gainers.
After a three-month slowdown, India's oil imports (already landed) from Russia bounced back in the first 15 days of October to 1.8 million barrels per day.
Reliance Industries Ltd on Thursday said it has halted the use of Russian crude at its export-only refinery in Jamnagar, Gujarat, as the company moves to comply with European Union sanctions. Reliance is India's largest buyer of Russian oil, which it processes and turns into fuel, such as petrol and diesel, at its giant oil refining complex at Jamnagar.
India has condemned the escalating attacks on commercial shipping in West Asia, particularly after a Thai-flagged vessel en route to India's Kandla Port was targeted in the Strait of Hormuz. The attacks have disrupted global oil and gas supplies, impacting India's energy imports.
Private-sector oil refiner Reliance Industries Limited (RIL) last week received a general licence from the United States (US) government to buy Venezuelan oil, an industry executive said.
The Iran conflict led to a sharp correction in Reliance Industries Ltd's (RIL's) share price, which has been partially reversed by a rebound.
According to the Pentagon, the vessels were targeted as part of efforts to prevent the deployment of naval mines in the strategically vital passage through which a significant portion of global crude oil shipments transits.
Crude oil prices could dip to the low $60s by the end of 2025 after rising to $80 a barrel in the last quarter (October-December) of 2024 - up nearly 10 per cent from current levels, suggest analysts at JP Morgan. The main players in West Asia, including Saudi Arabia and the UAE, have a strong incentive to keep the conflict contained, according to the JP Morgan report.
In the present hyper-connected world, there are many domestic and global factors that affect financial markets. Of them, the most powerful and often least predictable are geopolitical events, which often boil down to one diplomatic headline.
Indian private sector and State-run refiners continued to receive crude oil from Russian suppliers even after November 21 -- the winding-down date for US sanctions on supplies from leading Russian oil producers imposed in October -- as new intermediaries sprung up in West Asia to sell the oil, according to senior refining sources and ship tracking data.
The latest flashpoint in West Asia has derailed India's preliminary plans to resume crude oil imports from Iran, officials said. In January, officials of the Ministry of Petroleum and Natural Gas had told Business Standard that the government had been studying proposals for the same, given that India was trying to expand sources of imports. "We are always monitoring the situation when it comes to crude flows.
Indian equity investors experienced a significant loss of 16.32 lakh crore due to a two-day stock market decline fueled by escalating geopolitical tensions involving the US, Israel, and Iran.
Falling debris from an intercepted Iranian drone caused a 'limited fire' at Saudi Aramco's Ras Tanura refining facility in Saudi Arabia, Saudi Defence Ministry spokesperson Turki Al-Maliki said, according to Al Arabiya.
Analysts predict continued volatility in Indian equity markets due to domestic macroeconomic data, F&O expiry, global developments including US tariff policies, and geopolitical tensions.
The ministry of finance is likely to assume crude oil price to remain within $85 per barrel while estimating subsidies for the Interim Budget 2024-25 (FY25), to be presented on February 1. Brent crude prices moved up on Thursday, ending at $78.9 per barrel. Crude oil and cooking gas prices, which move in tandem, impact fertiliser and cooking gas subsidies, constituting 53 per cent of the government's total subsidies.
Sensex and Nifty post steepest weekly loss in over a year, falling nearly 3 per cent.
A sharp sell-off in the Indian equities markets after a spike in crude oil prices should not be surprising. Historically there is a negative correlation between stock valuations in India and the price of Brent crude oil, which is the benchmark for the Indian crude oil basket. Between 2011 and 2014, crude oil traded above $100 a barrel for an extended period, the Sensex-trailing price/earnings (P/E) was 18X, on average, during the period, nearly 22 per cent lower than the current index P/E of 23X.
India is set to reduce its direct imports of Russian crude from late November, following new US sanctions on Rosneft and Lukoil, effective November 21.
India's eight core infrastructure sectors experienced a slowdown in production growth, reaching a two-month low of 4% in January. Crude oil and natural gas output declined, while refinery products remained flat. Overall growth for the April-January period was also lower compared to the previous fiscal year.
India, the world's third-largest oil consumer, spent 2.5 billion euro on buying crude oil from Russia in September, 14 per cent less than the previous month, a European think tank said. India remained the second-largest buyer of Russian fossil fuels in September behind China, according to the Centre for Research on Energy and Clean Air (CREA).
The Indian government has directed oil refineries to increase LPG production to ensure a stable supply of domestic cooking gas, amidst concerns over potential disruptions from the escalating Middle East conflict and its impact on imports.
India has gained the least since Russia invaded Ukraine in February 2022 and was penalised the most, while the US, China and the European Union emerged as the biggest beneficiaries from the war.
Shares of Reliance Industries Limited (RIL) tumbled on Tuesday, posting its biggest single-day decline in 19 months, amid controversy over its purchase of Russian oil and profit-booking after recent gains.
Reliance Industries Ltd, India's largest buyer of Russian oil and most impacted by the latest US sanctions, on Friday said it will comply with all applicable restrictions and will adjust its refinery operations to meet compliance requirements.
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