Oil prices surge in global market amid escalating Iran-Israel tensions

Oil prices surged by $3 a barrel in the international market on Friday amid reports of Israel launching a missile attack against Iran raising fears of escalating geopolitical tensions that could disrupt crude shipments.

The benchmark Brent crude price rose to around $90 a barrel U.S. West Texas hovered at around $85 a barrel.

The price of Brent crude had fallen to around $87 per barrel on Wednesday following higher US inventories and the decline in Chinese demand due to a slowing economy.

US media reports on Friday said that Israeli missiles had hit sites in Iran. The attack was reported to be in retaliation to Iranian drone attacks on Israel carried out earlier.

However, Iran denied reports of the Israeli missile attack and claimed that the explosions heard were from the firing of its air defence systems.

Since India imports over 85 per cent of its crude oil requirement, a sharp increase in global oil prices could lead to an increase in the country’s oil import bill and weaken the rupee due to the larger outgo of foreign exchange.

The cheaper purchase of oil from Russia has helped India to reduce its oil import bill by 16 per cent to $132.4 billion for the fiscal year 2023-24 from $157.5 billion spent in the previous year.

The total quantity of oil imported in 2023-24 was 232.5 million metric tonnes (MMT) compared with 232.7 MMT in 2022-23 which is more or less the same level.