Fresh Houthi attacks on Saudi Arabia have rattled global oil markets, pushing Brent crude prices above $100 a barrel. India, which imports 90% of its oil, faces rising inflation and economic pressure. Experts said, "Any further escalation in West Asia could trigger fresh swings in oil prices and deepen concerns."
Summary
Fresh Houthi attacks on Saudi Arabia have heightened concerns about oil supply disruptions and pushed crude prices higher. For import-dependent India, sustained price increases could widen the import bill, stoke inflation and pressure economic growth.
New Delhi: Fresh attacks by Yemen's Houthi rebels on Saudi Arabia have once again rattled global oil markets. With Brent crude already trading above $100 a barrel, any further escalation in West Asia could trigger fresh swings in oil prices and deepen concerns over global energy supplies.
For India, the stakes are high as the country imports nearly 90% of the crude oil it consumes, making it vulnerable to any sustained rise in global prices. Higher crude costs could push up India's import bill, fuel inflation and put additional pressure on economic growth. Mint explains the unfolding situation and its impact on India, which imports about 90% of its oil needs.
What has been the latest flashpoint in the conflicts in West Asia?
The recent attacks by the Houthis on the King Khalid International Airport in Riyadh, Saudi Arabia, have raised concerns of further escalation in West Asia. In the latest attack on Sunday, one person was killed and 11 were injured, according to a report by BBC. This follows the attacks on Saturday, which left 13 dead and another 308 people injured. The Houthis have warned airlines and passengers against using Saudi Arabian airports and airspace. They also attacked oil facilities and Dammam airport in eastern Saudi Arabia.
What are the other factors driving the oil prices?
On Monday morning, oil prices eased after US President Donald Trump announced an 'energy ceasefire' between Russia and US wherein both countries would not attack each other's energy infrastructure. Trump said that it is 'effective immediately' but provided no details. Ukrainian President Volodymyr Zelensky initially expressed surprise at the announcement; however, he later said that Kyiv would support it if Moscow complied with the ceasefire. He also accused Russia of striking Ukrainian energy facilities after Trump's post on Truth Social. Around 8am, the December Brent contract on the Intercontinental Exchange was trading at $103.09 per barrel, up 1.6% from its previous close.
What has been the recent crude price trend?
Oil prices have been highly volatile over the past month. It ranged from around $94 to nearly $105 a barrel. On 22 September, it reached $94.30 amid an easing in concerns over supply constraints in West Asia, following a fresh flare-up in August in the conflicts between Iran and US, and the Houthis and Saudi Arabia. Further, in the past two weeks, prices have again started climbing. It reached $104.70 on 9 October amid the fresh hostilities.
Does this persistent geopolitical uncertainty and volatility in the market impact India?
Given India's dependence on oil imports, uncertain supplies and price volatility affect the Indian economy. Nearly 90% of India's oil requirement is imported. Traditionally, about 60-65% of India's oil imports came from West Asia, a share that has now declined drastically. Along with supply constraints, volatility and uncertainty in the region keep prices elevated, thereby impacting major importers like India. The import bill in the last fiscal stood at around $123 billion, and a $1-per-barrel increase over a year may raise the country's annual import bill by ₹18,000 crore. Already India has imported crude worth $74.85 billion in the first five months of this fiscal (FY27), about 48% the of the total import bill of FY26. An increase in the import bill is set to exert inflationary pressure if higher costs are passed on to downstream products and consumers, thereby impacting gross domestic product (GDP) growth, or it may widen the country's current account deficit.
What has been the recent trend of India's petroleum product consumption?
Being the third largest crude importer and fourth largest refiner in the world, the country is a major hub for petroleum products consumption. Data from the Petroleum Planning and Analysis Cell (PPAC) showed that India's petrol demand in September was 3.64 million tonnes, about 7.21% higher year-on-year, while diesel consumption was up 4.86% to 7.11 million tonnes. So far this fiscal (April-September), petrol and diesel consumption have increased 7% and 4.85% respectively. With increased consumption, oil imports are expected to grow going forward.
What have been India's efforts to ensure energy security amid the volatile geopolitical scenario?
Recently, P. K. Mishra, principal secretary to Prime Minister Narendra Modi, said that India has widened its crude-oil sourcing base from 27 to 43 countries to reduce exposure to geopolitical shocks while remaining integrated with the global economy. On the domestic front, the government and oil marketing companies are eyeing an increase in local oil and gas production. The recent launch of the 'Samudra Manthan - National Offshore Exploration Scheme' with an outlay of ₹84,000 crore aims to boost the hydrocarbon exploration and production sector. According to the government, India's eastern and western offshore basins are estimated to hold over 5,600 million metric tonnes of oil equivalent of hydrocarbon potential.