Petrol At Rs 200 Per Litre? Iran-Israel Conflict Sparks Fears Of Fuel, Gas And Gold Price Surge

Strait of Hormuz tensions threaten oil and LNG supplies; experts warn prolonged conflict could push crude to $110 per barrel

The escalating conflict between Iran and Israel has triggered fresh concerns over a sharp rise in global oil and gas prices, raising fears that petrol and diesel rates in India could surge significantly if the crisis deepens.

Israel has reportedly targeted more than 30 locations in Iran, including parts of Tehran, hitting government offices, airports and intelligence facilities. Amid missile strikes and widespread disruption, a blackout has been reported in several areas, with schools and colleges shut.

Though the conflict is over 2,000 kilometres away from India, its economic impact could be felt domestically, particularly at fuel pumps.

Why India Is Worried

Iran is one of the world’s largest oil producers, with an estimated 158 billion barrels of crude reserves. While US sanctions have restricted its exports, Iran remains a crucial supplier for countries such as China and India.

India imports nearly 40 per cent of its crude oil and about 50 per cent of its LNG requirements from Gulf nations, including Iran, Saudi Arabia and the UAE. Any disruption in this region directly affects India’s energy security.

The biggest concern is the Strait of Hormuz — a narrow but vital shipping route through which nearly 20 per cent of the world’s crude oil and around 20 per cent of global LNG exports pass. Nearly half of India’s oil imports move through this corridor.

If Iran attempts to block or restrict traffic through the Strait during heightened hostilities, global supply chains could be severely disrupted. Freight and insurance costs would rise sharply, pushing crude prices upward.

Could Petrol Touch Rs 200?

Energy experts warn that if the war intensifies and oil flows are curtailed, international crude prices could climb to between $95 and $110 per barrel. Brent crude is currently hovering around $73, already at a seven-month high.

If crude prices spike sharply and remain elevated, Indian oil marketing companies may eventually pass on the burden to consumers. While there has been no official indication from the government about any imminent hike, analysts say sustained disruption could lead to record-high petrol and diesel prices.

Gas Markets Face Fresh Shock

The crisis is also threatening the biggest disruption in global gas markets since Russia’s invasion of Ukraine in 2022.

Ship-tracking data shows that LNG trade through the Strait of Hormuz has nearly halted, with at least eleven LNG tankers linked to Qatar pausing voyages to avoid the waterway. Qatar is the world’s second-largest LNG exporter and supplies heavily to Asian markets, including India and China.

Experts have warned that “there is no replacement” if Qatari LNG shipments are significantly disrupted. Around four-fifths of Qatar’s LNG exports are delivered to Asia. India is among its top importers.

If LNG flows tighten, gas prices in Asia could rise sharply. Since many long-term LNG contracts are linked to crude oil benchmarks, any rise in Brent crude would also increase gas import costs for India.

Impact Beyond Fuel

Rising fuel costs could trigger broader inflationary pressure. Higher petrol and diesel prices typically increase transportation costs, leading to price hikes in essential goods such as vegetables, milk, grains and medicines.

Investors often move towards gold during geopolitical instability, potentially pushing gold prices higher. Equity markets could also face volatility if foreign investors pull out funds amid global uncertainty.

Industries dependent on petrochemicals — including paints, chemicals and synthetic textiles — may also come under pressure if input costs surge.

For now, the situation remains fluid. Indian authorities and global energy markets are closely monitoring developments in the Middle East, as the trajectory of the conflict will determine whether fears of a fuel price shock materialise.

Disclaimer: Fuel price projections are based on expert analysis of global crude trends and geopolitical developments. Actual price revisions depend on government policy and market conditions.