Indian Basket Crude Oil Crosses $100 as Middle East War Raises Risks

Global crude oil prices are moving sharply higher toward the $100-per-barrel mark as hopes of a near-term peace agreement in the Middle East fade and tensions between the United States and Iran intensify. The escalation is also pushing India’s crude import costs higher, while expensive LNG and freight rates are putting additional pressure on the country’s oil and gas sector.

Brent crude was trading near $99 per barrel, while West Texas Intermediate (WTI) stood at $94 per barrel. Prices gained after Iran warned the United States of “economic warfare” and said it had launched a new advanced missile at US warships.

The latest attack on Saudi Arabia’s Jizan refinery, which has crude processing capacity of around 400,000 barrels per day, added further upward pressure to oil markets. Iran has also announced plans to establish a new shipping corridor in the Strait of Hormuz, raising concerns over tanker movements through one of the world’s most important oil transit routes.

The prolonged conflict is prompting analysts to extend their forecasts for supply disruptions. Analysts said a full return to pre-war oil throughput was unlikely until late in the first quarter or early in the second quarter of 2027. Market participants have also increased their bullish positions in Brent crude as prospects for a peace settlement diminish.

India’s crude benchmark crosses $100

The impact is already visible in India. According to data from the Petroleum Planning and Analysis Cell (PPAC), India’s average crude import price, or Indian Basket, climbed to $101.07 per barrel, crossing $100 for the first time since May.

The Indian Basket averaged $99.38 per barrel in September so far, compared with $90 in August, $82 in July and $83 in June. The basket represents an average of Dated Brent, a sweet crude benchmark, and the Oman-Dubai sour crude benchmark.

India’s crude import bill has risen substantially because of reduced supplies from the Middle East and higher shipping risks. Freight rates on the key route from Saudi Arabia’s Ras Tanura to India have surged by more than 400% since February 28, when the conflict began and the Strait of Hormuz was closed by Iran.

India paid 60% more for crude imports in the April-June quarter compared with the same period last year. The July import bill was also 41% higher year-on-year.

Russia remains key supplier

Amid rising prices and geopolitical uncertainty, Russia has reiterated its commitment to supplying crude oil to India despite potential US tariff measures targeting buyers of Russian energy. Russian Ambassador Denis Alipov said Moscow was prepared to supply as much oil as India required, arguing that excluding Russian crude would create significant risks for global energy markets.

However, India’s Russian crude imports reportedly eased in August from July’s record level amid Ukrainian attacks on Russian export infrastructure and stronger competition from China for Russian barrels.

Higher LNG prices are creating another challenge. Asian spot LNG prices recently reached their highest level since 2022, rising 61% from a year earlier and 22% over the past three months. Analysts expect India’s LNG imports to weaken in September after strong arrivals in August.