Indian Oil Companies Can Withstand $90 Crude Despite West Asia Tensions: CareEdge

Indian oil marketing companies could withstand crude prices near $90 per barrel over the medium term despite rising geopolitical tensions in West Asia.

Strong refining margins may help offset the financial pressure from elevated global oil prices.

According to a report by CareEdge Ratings, the recent escalation of hostilities around the Strait of Hormuz has driven volatility in global crude markets.

Since late February, benchmark Brent crude briefly surged above $100 per barrel before easing slightly.

The strait remains one of the world’s most crucial energy corridors. Nearly 20 per cent of global oil and liquefied natural gas supplies move through this narrow shipping route.

Roughly 20.8 million barrels of oil and petroleum products pass through the channel daily.

India faces significant exposure to disruptions in the strait. Approximately 40 per cent of the country’s crude imports travel through this route.

Any prolonged disturbance could complicate energy logistics and raise import costs.

Analysts, however, note that India has reduced some of this risk through diversified sourcing.

While West Asian suppliers still account for nearly half of India’s petroleum imports, the country has increased purchases from the United States and Russia over the past five years.

India currently imports around 5.5 to 6 million barrels of crude daily. Analysts estimate that a $10 rise in crude prices could raise the nation’s import bill by nearly $20 billion.

The report also warns of wider economic effects. Shipping disruptions could influence trade flows, especially as exports to West Asia reached about $64 billion in FY25, representing nearly 15 per cent of India’s total exports.

Global investors may also shift toward safe-haven assets such as the US dollar. This trend could pressure emerging market currencies, including the Indian Rupee.

Despite these risks, India’s strong foreign exchange reserves provide a buffer against external shocks, though financial market volatility may persist.

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