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India braces for fuel hikes as West Asia conflict escalatesIndia faces rising fuel prices as Brent crude surges amid US, Israel, and Iran conflict. Closure of the Strait of Hormuz threatens supply, impacting CAD and sectors like paints and chemicals.By Ajay Vaishnav  March 1, 2026, 11:18:35 PM IST (Published)3 Min ReadIndia’s retail fuel prices are facing severe upward pressure amid the escalating war between the US, Israel, and Iran threatens to choke global energy supplies. Brent crude surged 10% to approximately $80 a barrel in over-the-counter trade this Sunday, with analysts warning of a march toward $100 following reports of the closure of the Strait of Hormuz.

The geographical stakes are massive. Ajay Parmar, Director of Energy and Refining at ICIS, highlighted that the critical factor is the potential blockade of the Strait. The waterway carries over 20% of global oil supplies. Major tanker owners and trading houses have already suspended shipments through the route following warnings from Tehran.

According to a macro-risk analysis by Madhavi Arora, Chief Economist at Emkay Global, the impact on the Indian pump is direct with petrol prices estimated to rise by ₹0.55 per litre for every $1/bbl increase in Brent. Likewise, diesel prices are estimated to rise by ₹0.52 per litre for every $1/bbl increase.

Should prices sustain a $10/bbl deviation from the baseline, India’s Current Account Deficit (CAD) could widen by 0.5% of GDP, further straining the external balance, she added. Despite this, Arora suggests immediate shocks may be cushioned by India’s strategic reserves and the ability of Oil Marketing Companies (OMCs) to absorb initial losses.

Also Read | OPEC+ to resume oil output increases as Iran conflict rages

US-Iran war impact on stocks

Gurmeet Chadha, CIO at Complete Circle, noted that while upstream explorers and standalone refiners might benefit, oil-linked sectors like paints and chemicals will face margin compression.

"Any sharp rise in crude is more damaging today, given elevated global debt levels," Chadha warned.

However, Mukesh Sahdev, CEO of X-Analysts, offered a more tempered view, suggesting the market has already "priced in" much of the risk. He argues that since the disruption occurs during February, considered a seasonally softer demand period, and with OPEC+ signaling a production increase of 200,000 barrels per day, crude is unlikely to spiral beyond the triple-digit mark.

Crude Oil futures outlook

In the futures market, Brent Crude Front-Month contracts are currently trading at a significant premium, reflecting a "war premium" of nearly 20%, according to a Reuters report. Traders are closely watching the WTI (West Texas Intermediate) spread, which has widened as US-based supplies become more attractive amid Middle Eastern volatility, it added.

While near-term futures remain volatile, the long-term curve shows signs of backwardation, suggesting that traders expect supply to eventually stabilise, provided the Strait of Hormuz remains a "precautionary suspension" rather than a permanent blockade, the Reuters report further said.Continue ReadingTagsDieselfuelIranIsraelPetrol