Oil markets react to Middle East tensions, sending Brent crude over $90 and impacting global inflation.
Geopolitical Triggers
Global oil prices have surged sharply, with Brent crude crossing $90 per barrel, amid escalating tensions in the Middle East, particularly between Israel and Iran. This rise has sparked renewed concerns over global inflation and energy supply disruptions.
The tensions escalated after reported drone attacks on oil facilities in Iran, leading to fears of retaliatory action that could impact the Strait of Hormuz, through which over 20% of global oil trade passes. Major energy companies have begun reassessing supply chains, while governments brace for rising import bills.
India, which imports nearly 85% of its crude oil, could face pressure on fuel prices, current account deficits, and inflationary trends. The Reserve Bank of India may be forced to reevaluate interest rate strategies if fuel costs continue to rise.
The price shock is also impacting aviation, shipping, and logistics globally. While OPEC+ has not announced additional supply cuts, analysts suggest markets may remain volatile unless diplomatic solutions emerge.
Investors are closely watching geopolitical developments. If tensions persist, crude prices could remain elevated, affecting economic recovery trajectories in both developing and advanced economies.