Crude oil prices are hovering above $110 as the West Asia conflict continues to disrupt global supply, raising fresh concerns for inflation and economic growth. As of 8:30 am, Brent crude was trading at $112.85 per barrel, up 0.59%, while WTI crude stood at $98.91 per barrel, up 0.69%.
More than three weeks after US and Israeli strikes on Iran triggered a chain of retaliation across the region, the conflict has now spread across West Asia. What started as a geopolitical escalation is now turning into an economic one,
The concern is no longer limited to rising prices. It is about supply getting hit.
The Strait of Hormuz, which carries nearly a fifth of global oil, is under pressure. Tanker movement has slowed, insurance costs have risen sharply, and repeated attacks have turned one of the world’s most important energy routes into a high-risk zone. At the same time, strikes on energy infrastructure across Iran, Saudi Arabia, Qatar and the UAE are beginning to affect production and refining capacity.
“The s on both oil supply and critical energy infrastructure, including production sites and transit chokepoints such as the Strait of Hormuz,” says Kaushal Sampat, President at Vayana.
Market estimates suggest that 8 to 10 million barrels per day of supply could be affected if disruptions continue. The Strait of Hormuz alone carries nearly 20 million barrels per day, which means even partial disruption can have global impact.
Sampat describes the situation as a wider shock to the system. “In our view, this is not purely short-term, but a combination of immediate disruption and emerging structural risk,” he says.
“This is not just a price shock; this is also an availability issue,” adds Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The impact is already visible in global markets. Equity markets have turned volatile as oil prices rise, while currencies and bond yields are adjusting to higher inflation risks. Investors are beginning to reassess growth expectations as energy costs move up.
“The recent weakness in Indian equities can be attributed to the escalating conflict in the Middle East, rising crude prices and persistent foreign institutional selling,” says Dr. Ravi Singh, Chief Research Officer at Master Capital Services.
The pressure is visible in domestic markets as well. The Nifty has declined in recent weeks, reflecting a broader correction as global risks increase. The rupee has also weakened, adding to the stress.
Markets often react before the real economy does. The current volatility suggests that investors are already pricing in the risk of slower growth.
The bigger risk now is
“If Brent crude spikes above $120 and remains there for a month, that can impact global growth. Even a global recession cannot be ruled out,” says Vijayakumar.
The impact of higher oil prices usually comes in stages.
“The impact of $110 oil on the economy occurs in three waves. At first, it will be fuel surcharges from transport and logistics companies. The short-term wave affects food and FMCG, while the medium-term wave influences core inflation,” says Aamir Makda, Commodity and Currency Analyst at Choice Broking.
At higher levels, the risks become sharper.
“If prices remain at or above $130 for more than two quarters, historical data ,” Makda adds.
At the same time, there is still some uncertainty over how long the situation will last.
“It is difficult to predict whether this would turn out to be a short-term issue or a protracted problem. Chances are that this would be temporary since a protracted problem would be disastrous for all,” says Vijayakumar.
There are also more balanced views.
“The current escalation hinges on several unknowns. For now, crude is facing a supply chain disruption rather than a fundamental shortage, though attacks on energy infrastructure are heightening risks. Oil above $130 could trigger demand destruction,” says Ankita Pathak, Head of Global Investments at Ionic Asset.
“If the conflict lasts a few more weeks, the economic impact may stay cushioned. A prolonged war, however, could drive demand destruction, restrict rate cuts amid rising inflation, and tighten liquidity with broader ripple effects,” Pathak adds.
For India, the impact is immediate and direct.
The country imports nearly 85-90% of its crude oil needs, making it highly sensitive to global price and supply shocks. Higher oil prices increase costs across sectors, from transport to manufacturing, and eventually push up prices for consumers.
There are already early signs of strain. Cooking gas deliveries have slowed in recent weeks, and businesses dependent on LPG and LNG, including restaurants and small manufacturers, are beginning to feel the pressure.
India’s inflation outlook is also at risk.
“Sustained oil above $100 per barrel could push inflation beyond 5% in the coming quarters,” says Dr. VP Singh, PGPM Director and Professor of Economics at Great Lakes, Gurgaon.
He adds that fuel prices may have to adjust. “Retail pump prices will have to reflect the true crude oil price,” Singh says.
On the global front, risks are building.
“There is a very high probability of a global slowdown if disruptions persist, particularly as major economies remain heavily dependent on energy supplies from the Middle East,” Singh says.
However, he adds that India may still hold up better. “India is likely to remain on a growth trajectory, with limited risk of entering into a recession,” he says.
The global economy is not in a recession yet. But the conditions that usually lead to one are beginning to form.
Oil prices are rising, supply remains uncertain, and the pressure is slowly moving through the system, from markets to households. If the disruption continues, the impact will build over time through higher costs, weaker demand and slower growth.