NEW DELHI: Oil prices climbed to a six-month high on Thursday, with Brent crude breaching the $72 per barrel mark for the first time since July 2025. The surge comes as geopolitical tensions between the United States and Iran intensify, with markets pricing in a potential supply disruption from the world's most critical oil artery [citation:2][citation:5].
- Brent crude: hit $72.08, highest since July 31, 2025 [citation:1][citation:3]
- Weekly gain: nearly 5%, snapping three-week losing streak [citation:7]
- Year-to-date: Brent up about 15% in 2026 [citation:2]
- 'War premium': analysts estimate $10-12/bbl built into prices [citation:2]
- Strait of Hormuz: 20% of global oil supply passes through this chokepoint [citation:5][citation:6]
- US crude inventories: dropped by 9 million barrels last week [citation:2][citation:5]
- Saudi exports: fell to 6.988 mbpd in Dec, lowest since Sept [citation:5][citation:8]
Why oil is jumping: four key drivers
1. US-Iran tensions reach boiling point
US President Donald Trump warned Iran must reach a nuclear deal within 10-15 days or "really bad things" will happen [citation:2][citation:3]. The US has deployed its largest military force in the Middle East since the 2003 Iraq invasion, including aircraft carriers and warships [citation:2][citation:5].
2. Strait of Hormuz in focus
Iran recently closed the Strait of Hormuz temporarily for military drills and planned a joint naval exercise with Russia [citation:5][citation:8]. The strait handles about 13-15 million barrels per day—roughly 20% of global oil consumption. Any disruption could spike prices further [citation:2][citation:6].
3. Supply tightness emerges
US crude stocks unexpectedly fell by 9 million barrels last week, contrary to analyst expectations of a build [citation:2][citation:5]. Meanwhile, Saudi exports dropped to a multi-month low, adding to supply concerns [citation:5].
4. Russia-Ukraine talks stall
Peace talks in Geneva ended without breakthrough, keeping Russian oil sanctions in place longer than some had hoped [citation:5][citation:8]. This removes any near-term expectation of increased Russian supply entering markets.
Impact on Indian economy: a $2 billion worry for every $1 hike
For India—the world's third-largest oil consumer and over 88% import-dependent—every $1 increase in oil prices adds roughly $2 billion to the annual import bill [citation:6]. More than 40% of India's crude imports transit the Strait of Hormuz, making the country particularly vulnerable to any escalation [citation:6].
Shares of oil marketing companies reflected the pressure. HPCL, BPCL, and IOC were down nearly 1% each in early trade on February 20, while upstream companies like ONGC and Oil India gained [citation:2].
What analysts are saying
"The market will continue to rally in anticipation of something happening," said Andrew Lipow, president of Lipow Oil Associates [citation:5]. ING commodity strategists noted: "With a deal looking increasingly difficult to reach, it will be more challenging to find a route to de-escalation" [citation:7].
Citigroup outlined scenarios: a $70-75 bull case if supply risks persist but Strait remains open; a potential spike above $90 if Iran disrupts Hormuz; and a possible $50 bear case if diplomatic breakthroughs occur alongside weak demand [citation:4].
Price scenarios if conflict escalates
| Scenario | Estimated Price Impact |
|---|---|
| Disruption to Iranian shipments only | +$10-12/bbl premium |
| Iran targets Strait of Hormuz | $90+/bbl |
| Attack on Iranian infrastructure | $100+/bbl |
| Direct attack on Gulf facilities | $130+/bbl (2022 levels) |
Global supply-demand picture
Beyond geopolitics, physical markets show tightness. The Brent forward curve is in backwardation, indicating near-term supply concerns [citation:7]. US refining utilisation climbed as exports rose, drawing down inventories [citation:5].
OPEC+ is reportedly leaning toward a output increase from April, but any decision could be complicated by rising prices and geopolitical uncertainty [citation:5].
Oil at 6-month high: key takeaways
- Brent crossed $72: first time since July 2025, up nearly 5% this week [citation:1][citation:3]
- US-Iran deadline: 10-15 days for nuclear deal, military buildup continues [citation:2][citation:5]
- Strait of Hormuz risk: 20% of global oil at risk if conflict widens [citation:6]
- India impact: every $1 adds $2 billion to import bill; 40%+ imports transit Hormuz [citation:6]
- Supply tightness: US crude stocks drop 9 mn barrels; Saudi exports slip [citation:5][citation:8]
Rupee, gold and oil
The Indian rupee remained under pressure near 90.66 against the dollar [citation:8]. Gold prices saw some safe-haven interest, though oil remains the primary focus for emerging markets [citation:8].
Disclaimer: This report is based on live market data and analyst commentary. Oil markets remain volatile due to geopolitical headlines. Please consult your financial advisor before making investment decisions.