- By Ajeet Kumar
- Thu, 12 Mar 2026 08:48 AM (IST)
- Source:JND
- Iran warns of $200 oil amid escalating US conflict.
- India faces economic crisis if crude prices soar.
- Tanker attacks in Iraqi waters escalate regional tensions.
The United States and Iran have signalled no quick end to their war, with US President Donald Trump saying it was necessary to finish the job and Iran warning that the world should be ready for oil at USD 200 a barrel after striking tankers in Iraqi waters and other ships near the vital Strait of Hormuz. This could leave the Indian market in an uncomfortable position, as the government had warned it would increase the prices of petrol and diesel if crude prices crossed USD 130 per barrel.
The war unleashed with joint US and Israeli air strikes nearly two weeks ago has so far killed around 2,000 people and thrown global energy markets and transport into chaos.
Trump said the United States had "won" the war but didn't want to have to go back every two years. "We don't want to leave early, do we?" he said on Wednesday. "We've got to finish the job." Oil prices, which shot up earlier in the week to nearly USD120 a barrel before settling back to around USD90, rose nearly 5 per cent on Wednesday and extended gains in Asian trade on Thursday amid renewed fears about supply disruption.
Iran attacks fuel tankers in Iraqi water
Iranian explosive-laden boats appear to have attacked two fuel tankers in Iraqi waters, setting them ablaze and killing one crew member after projectiles struck three vessels in Gulf waters, said port, maritime security and risk firms.
With pump prices surging, oil prices have become an increasingly urgent element in the calculations behind the war. Iran has made clear it intends to impose a prolonged economic shock, with the spokesperson for Iran's military command saying in remarks directed at the US on Wednesday: "Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilised."
The rate at which IEA countries can release strategic reserves will vary, and the amount released will account for just a fraction of the supply through the Hormuz Strait.
Why India should worry?
This means the oil prices in India could rise exponentially if the warning of Iran and Trump comes true. Earlier on Monday, news agency ANI, citing its government sources, said petrol and diesel prices in India are unlikely to increase, unless and until crude oil prices breach the USD 130 per barrel mark.
The fuel prices are unlikely to increase as India has enough stock, the sources said, adding that as per current projections, crude is expected to remain around USD 100 per barrel. "We expect crude oil prices to be around USD 100 per barrel," one of the sources said, adding that there was no shortage of petrol and diesel at any pump in the country. They further said that India has accelerated crude sourcing from routes outside the Strait of Hormuz to lessen any risks of supply disruptions.
However, amid the spiralling situation in Iraqi water, it could be a matter of concern for New Delhi if the war escalates further.
Impact on Indian economy
Import bill explodes: Adds tens of billions extra dollars yearly, draining forex reserves fast.
Rupee crashes harder: More dollar demand weakens currency, making everything imported costlier.
Inflation spikes sharply: Fuel, food, transport prices soar; hits common people's pockets immediately.
GDP growth tanks: Could shave 1 per cent off growth; jobs and investment suffer big time.
Fiscal pain worsens: Higher subsidies and lower revenue would result in tough budget cuts or price hikes inevitable.
(With inputs from Reuters)