The International Energy Agency (IEA) has said that crude oil prices recorded their highest monthly gain in March 2026, with North Sea Dated trading at $130 per barrel, as refiners scramble to replace West Asian grades.
Refiners in India are also impacted in terms of crude oil supplies considering the world’s third largest exporter sourced more than 50 per cent of its imports from the Middle East Gulf (MEG) region before the latest escalation in hostilities between Iran and the US (February 28).
The closure of the Strait of Hormuz (SoH) has exacerbated India’s crude oil shipments from Iraq, Saudi Arabia and the UAE.
However, Indian refiners have diversified supplies reducing their dependence on West Asia and the SoH to 30 per cent currently, which helps it get assured cargoes, albeit at record high prices. High prices coupled with a weak India Rupee is adversely impacting India’s current account deficit.
In its oil market report for April 2026, the IEA pointed out that global oil supply plummeted by 10.1 million barrels per day (mb/d) to 97 mb/d in March, with continued attacks on energy infrastructure in the West Asia and ongoing restrictions to tanker movements through the Strait of Hormuz leading to the largest disruption in history.
“Oil prices posted their largest-ever monthly gain in March in the wake of the most severe oil supply shock in history. Spot crude benchmarks and differentials soared, outpacing futures markets, as refiners anxiously scrambled to replace locked in West Asian cargoes,” it added.
At the time of writing, North Sea Dated crude was trading around $130 a barrel, which is $60 above pre-conflict levels. IEA noted that last week’s announcement of a two-week ceasefire provided some welcome respite to global oil markets just as the impact of disruptions to supply and trade were spreading globally.
However, at the time of writing, it remains unclear whether the ceasefire will turn into a lasting peace and a return to regular shipping flows through the SoH.
With oil-importing nations scrambling to source replacement barrels from an increasingly shrinking pool of supply, physical crude oil prices surged to record levels near $150 per barrel, far above the prices in futures markets, with the physical-futures disconnect becoming increasingly acute. Even steeper gains have been seen for refined products, with middle distillate prices in Singapore reaching all-time highs above $290 per barrel.
S&P Global Energy pointed out that a fragile US-Iran ceasefire with no major missile attacks, despite the US blockade of Iranian ports going into effect, and reports of a second round of talks being considered are ‘Neutral’ for global gas and LNG prices.
Ships going to and from Iranian ports have not openly challenged the US blockade yet, but the risk of miscalculation and retaliation remains high. Iran has said it would target Gulf port infrastructure if its vessels are threatened, said Eric Yep, Senior principal analyst for First Take Gas at S&P Global Energy CERA.
“The likelihood of stranded ships, including laden LNG carriers, evacuating quickly from the Strait of Hormuz during the ceasefire has now decreased significantly. The risks are emanating from a lack of clarity on what the US blockade means and how Iran will respond. A full naval blockade would stop everything from Iranian oil exports to imports of essential and non-essential goods and materials, including food supplies,” he added.
If the blockade cripples the Iranian economy, it risks triggering an escalatory response. The control of SoH will remain a key concern for markets in the coming weeks, Yep emphasised.