New Delhi: Global crude oil prices traded marginally higher early Monday as traders weighed fresh threats of escalation of the conflict between the US and Iran.
At 8.44 am, the April contract of Brent on the Intercontinental Exchange was trading at $112.87 per barrel, higher by 0.61% from its previous close. The April contract of the West Texas Intermediate (WTI) on the NYMEX was trading at $98.95, higher by 0.73% from its previous close.
US President Donald Trump on Saturday gave Iran a 48-hour deadline to reopen the vital shipping route of Strait of Hormuz and threatened to strike its power infrastructure in case it is not reopened.
“If Iran doesn’t FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!,” Trump said in a post on Truth Social.
Iran also responded with threats to strike power infrastructure across West Asia in case its power network is attacked.
The Strait of Hormuz usually allows transport of 20% of global crude and natural gas trade. Fatih Birol, executive director of the International Energy Agency on Monday said that the global economy is currently under a “major threat”.
“Many of us remember the two consecutive oil crises in the 1970s… at that time, in each of the crisis, the world has lost about five million barrels per day, both of them together, 10 million barrels per day,” he said.
“As of today, we lost 11 million barrels per day, so more than two major oil shocks put together,” Birol added, while calling for global efforts to resolve the crisis.
In line with the surge in global crude prices, the Indian basket of crude oil has hit a fresh high of $156.29 per barrel as of 19 March. The Indian basket of crude oil is a derived basket comprising sour grade (Oman & Dubai average) and sweet grade (Brent dated) crude oil processed in Indian refineries in the ratio of 78.71: 21.29.
The average price of the basket in March stood at $117.09 per barrel, higher than $69.01 in February.
The increase in crude prices is significant for India, as it imports 90% of its oil requirements, and a $1-per-barrel increase over a year could add around ₹16,000 to the country’s total import bill.
In this backdrop, Prime Minister Narendra Modi on Sunday chaired a Cabinet Committee on Security meeting to review the conflict situation and India’s plans to ensure food, energy and fuel security.
