Source: U.S. Energy Information Administration, Refinitive Data as on March 16,2026
Historical trends suggest uncertainties typically lead to short-term market fluctuations, but markets have consistently demonstrated resilience, bouncing back and stabilising as the situation becomes clearer and the impact becomes more apparent. In the year 2022, due to Russia-Ukraine conflict oil prices surged beyond $100. Recently, conflict across the Middle East has escalated oil prices again beyond $100 at the start of March. It is driven by developments in the Middle East and a sudden deterioration in shipping security in and around the Strait of Hormuz, a critical passage for approximately one-fifth of global oil and gas flows.
Brent futures briefly dipped below $100 on March 23, 2026, offering a temporary reprieve from the recent surge in oil prices, but the larger conflict cloud remains, casting uncertainty over the market's trajectory.
The repercussions of further rise in crude oil prices from current levels would vary across sectors that are directly or indirectly exposed, and impact on profitability will depend on the ability to pass on the cost increases. On the other hand, the increase in crude oil prices will benefit upstream oil companies because they translate to more revenue, while costs are fixed. If the ongoing geopolitical uncertainties in the Middle East persist or escalate, there could be adverse impact on various business segments such as basmati rice, fertilisers, diamond polishing, travel operators and airlines, given their direct exposure to the region. Additionally, sectors such as ceramics and fertilisers, with high dependence on imported liquefied natural gas (LNG), may face near-term production impact and will require close monitoring. Crude-linked sectors such as downstream oil refiners, tyres, paints, specialty chemicals, flexible packaging and synthetic textiles could also be affected.
India’s daily consumption of crude oil is about 55 lakh barrels. Due to ongoing tensions in the middle east, India has secured crude oil supply through diversification of its procurement from around 40 countries. About 70% of crude imports are now coming from routes outside the Strait of Hormuz compared with about 55% earlier. Government has also issued orders to balance the needs of priority sectors while addressing the supply challenges posed by such disruptions.
Historical evidence suggests that equity markets have typically rebounded within four to five weeks following geopolitical shocks as uncertainty subsides and investors refocus on underlying macroeconomic fundamentals. The key risk is a short-term increase in crude prices. Since India imports 80% of its crude oil, changes in crude prices directly impacts through higher import bills, elevated inflation and pressure on the current account balance.
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