India, neighbours could face oil price rise, supply disruptions as Israel targets Iranian facilities

The weekend attacks on Iran’s oil facilities – widely seen as part of escalating hostilities between Israel and Iran – represent a dangerous moment for global energy security.

While the physical damage to Iran’s production facilities is still being assessed, the broader strategic implications are already rippling through global oil markets. There is widespread concern about supply security and the inflationary consequences for both advanced and emerging economies.

Global impact

Iran, which holds about 9% of the world’s proven oil reserves, currently exports between 1.5 and 2 million barrels per day, primarily to China, despite long-standing United States sanctions.

While its oil output is not as globally integrated as that of Saudi Arabia or the United Arab Emirates, any disruption to Iranian production or export routes – especially the Strait of Hormuz, through which about 20% of the world’s oil supply flows – poses a systemic risk.

Markets have already reacted. Brent crude prices rose more than US 6%, while West Texas Intermediate price increased by over US 5% immediately after the attacks.

These price movements reflect not only short-term supply concerns but also the addition of a geopolitical risk premium due to fears of broader regional conflict.

International oil prices may increase further as the conflict continues. Analysts expect that Australian petrol prices will increase in the next few weeks, as domestic fuel...

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