International crude oil prices rose more than 3% on Monday morning as the West Asia war escalated, with Yemen’s Houthi militants opening a new front through missile and drone attacks on Israel.
Around 6:30 am, the May contract of Brent crude on the Intercontinental Exchange was at $115.91 per barrel, up 3.00% from its previous close. The May contract of West Texas Intermediate on the NYMEX rose 3.03% to $102.61 a barrel.
The conflict involving the US, Israel and Iran has now entered its fifth week, with nearly 20% of global oil and gas supplies still effectively constrained due to disruptions in the supply chain.
Apart from the blockade of the , several oil and gas facilities, refineries and fields have been damaged, raising the risk of longer-term supply disruptions.
Over the weekend, attacked Israel for the first time since US and Israeli forces began striking Iran a month ago, opening a new front in the rapidly escalating conflict.
The Houthis, who control much of northern Yemen, launched two missile and drone attacks on Israel within 24 hours on Saturday, according to a report by Al Jazeera. The Israeli army said the attacks were intercepted. However, the group pledged to continue fighting in support of “resistance fronts in Palestine, Lebanon, Iraq, and Iran”.
The Houthis’ involvement has also heightened concerns about potential disruptions in the Bab-al-Mandeb Strait, a crucial chokepoint for global energy trade connecting the Red Sea to the Gulf of Aden and the Indian Ocean.
The group had previously attacked ships in the strait following the Hamas-Israel war in 2023, although those attacks subsided last year.
India’s exposure
The surge in oil prices carries significant implications for India, which imports nearly 90% of its crude oil requirements.
As of 26 March, the Indian crude oil basket stood at $115.75 per barrel, easing from the highs of over $150 per barrel reached earlier this month.
An increase of $1 per barrel sustained over a year can raise India’s annual import bill by about ₹16,000 crore, adding pressure on inflation and fiscal balances.
Addressing the nation during the ‘Mann Ki Baat’ broadcast on Sunday, said the region where the war is underway is a major source of India’s energy needs, and that the conflict is triggering a global petrol and diesel crisis.
“Our global relations, the support we receive from various countries, and the strengths the country has built over the past decade have enabled India to bravely confront these circumstances,” he said.
His remarks come amid concerns over potential fuel shortages. The government, however, has maintained that adequate stocks of crude oil, petrol and diesel are available in the country.