Iran-Isreal Tensions Push Crude Prices Higher Amid Hormuz Risk

Key Highlights

• Product Pricing Overview: Bitumen, base oil, furnace oil, and lubricants are trading stable, with regional price variations.
• Geopolitical Risks: Escalating Israel-Iran tensions threaten to disrupt the Strait of Hormuz, affecting 20–25% of global energy transit.
• India’s Preparedness: Strategic oil reserves and forward crude contracts shield short-term disruptions, but market caution persists.
• Crude Oil Surge: Brent and WTI crude rose to $75/bbl and $74/bbl respectively amid refinery attacks and supply fears.

Petroleum Product Prices Across Indian Ports and Cities

• Roadgrip Bitumen VG40 in bulk is priced at ₹36,890/MT in Karwar, while refinery-grade VG30 bulk bitumen is being offered at ₹48,382/MT in Mathura. 
• In Pithampur, Roadgrip Bitumen Emulsion RS1 (bulk) stands at ₹32,290/MT, and the SS1 variant in drum packaging is available at ₹33,390/MT. 
• Base Oil SN150 is priced at ₹68.5/kg in barrel form in Delhi, and its bulk counterpart is quoted at ₹62/ltr in Kandla. Virgin 180cST Furnace Oil in bulk is trading at ₹50/kg in Mundra. 
• For rubber process oils, Sephan Aromatic (barrels) is available at ₹45.5/kg in Mundra, while Iranol Aromatic (bulk) is priced at ₹44/kg in Mumbai. 
• In the lubricants segment, LubriEdge Hydraulic Oil 68 (bucket) is at ₹91/ltr in Bhiwadi, Gear Oil 150 (barrel) at ₹115/ltr, Rust Preventive Oil (WDM type, barrel) at ₹122/ltr, and Metal Working Fluid (Soluble Cutting Oil, barrel) at ₹112/ltr—all in Bhiwadi.

Impact of Strait of Hormuz Threat on Energy Supply Chains

• The escalating tensions between Israel and Iran have led to heightened fears of a global supply shock in crude oil and natural gas. 
• India, which imports nearly 90% of its crude oil, is especially vulnerable. Around 40% of India's crude imports originate from Middle Eastern countries such as Iraq, Saudi Arabia, UAE, Kuwait, and Qatar—all reliant on the Strait of Hormuz for shipping.
• Currently, crude oil supplies remain uninterrupted. However, increased geopolitical risks have raised shipping costs (including insurance premiums) and have tightened supply routes, pushing Indian oil marketing companies (OMCs) into a cautious zone. 
• Despite these risks, India's strategic reserves—enough to last around 74 days—and advance crude procurement contracts for the next 3 months have provided a short-term buffer against any immediate supply disruption.

Market News: Brent and WTI Price Surge Following Infrastructure Attacks

• Crude oil prices surged to two-month highs last week as Israel’s airstrikes targeted Iran’s vital oil and gas infrastructure, reportedly setting multiple refineries on fire and damaging the South Pars natural gas field. 
• Iran has also threatened to close the Strait of Hormuz, a chokepoint through which nearly 20% of global oil and 25% of global LNG is transported.
• On June 16, Brent crude was trading around $75/bbl and WTI at $74/bbl, marking a notable uptick from the pre-conflict range of $65–70/bbl. 
• While historically Iran has never successfully closed the Strait of Hormuz—even during major conflicts—the current aggressive stance has raised global market anxieties. 
• The potential rerouting or disruption of traffic through this passage is a significant concern for both oil-dependent nations and the broader global economy.

Market Expectations: Price Volatility Ahead Amid Uncertainty and Risk Premiums

• Analysts expect continued volatility in global crude prices amid geopolitical uncertainty. Should the Strait of Hormuz be partially or temporarily blocked, oil prices could spike by $5–$10 per barrel. Although the likelihood of a full closure remains low, even minor disruptions could have inflationary impacts worldwide. 
• For now, markets will closely monitor the security of key shipping routes, diplomatic developments, and any further escalations in the Middle East.