A sharp surge was recorded in the international oil market on Thursday. The price of global benchmark Brent crude rose by about 8.2 percent to above $100 per barrel in morning trade.
Actually, Iranian boats filled with explosives targeted two oil tankers named Safesea Vishnu and Zefyros in Iraq’s maritime zone. Following this incident, Iraq has temporarily suspended operations at all its major oil terminals due to security concerns. This has once again increased uncertainty regarding the supply of crude oil in the global market, leading to a sharp rise in prices.
Why was the attack carried out?
It is believed that this attack was carried out in response to global efforts to lower oil prices. In fact, to control rising crude oil prices, the International Energy Agency (IEA) has decided to release approximately 400 million barrels of oil from its emergency reserves into the market. The aim is to increase supply in the market and bring prices down.
Not only the United States, but many developed countries like Japan, South Korea, Germany, and Britain are also increasing oil supply to the market by releasing oil from their strategic petroleum reserves.
However, it is believed that Iran is not happy with this move. It believes that if oil prices fall, it will reduce pressure on the US and European countries to stop the war. In this situation, by attacking Iraqi tankers, Iran has tried to signal that if more oil is forcibly introduced into the market, then oil supply-related infrastructure and vessels could be targeted.
Iran’s Stern Warning
Iran has adopted a tough stance after US and Israeli attacks on its oil facilities and refineries. Tehran has warned that if the situation continues, global crude oil prices could reach $200 per barrel. Iran states that it will not allow oil supply to the US or Israel through the Strait of Hormuz. It is worth noting that about 20 percent of the total crude oil supplied globally passes through this maritime route, so any tension here can affect the global market.
Impact on India
India fulfills a large part of its energy needs through imports. Approximately 80-85 percent of the country’s total crude oil imports come from the Middle East. Iraq is also among India’s major suppliers, and India buys about 20 percent of its crude oil from Iraq. In this scenario, Iran’s targeting of Iraqi tankers and the suspension of operations at Iraq’s oil terminals due to security reasons could also impact India’s oil supply and prices.
The rise in global crude oil prices is expected to have an impact on India. Amid increasing tension in the oil market, its effect is also clearly visible in the Indian stock market. In Thursday’s trading, the Sensex has fallen by more than 900 points, while Nifty has also seen a sharp decline.
Due to increasing uncertainty regarding oil and concerns about supply, investors are showing panic, which is directly affecting the market’s movement.
