Oil Price Today (September 11): Crude oil soars 13% this week, set to close week above $100 after 4 months. What are experts saying?

The recent surge in crude oil prices to nearly $100 per barrel — a 13% weekly jump as of September 11 — marks the highest level in four months and underscores the fragility of global energy markets amid escalating geopolitical tensions in the Middle East. The immediate trigger is the seizure of a key Yemeni port by Iran-aligned Houthi rebels, which has raised serious concerns over the security of commercial shipping through the Red Sea and the Strait of Hormuz, the world’s most critical oil chokepoint through which approximately 20% of global petroleum liquids transit daily. This development echoes the 2019 attacks on Saudi Aramco facilities and the 2021 Suez Canal blockage, both of which caused sharp, albeit temporary, supply disruptions. However, the current situation carries greater systemic risk due to the direct involvement of non-state actors backed by a regional power, Iran, and the potential for broader conflict involving Israel, the US, and Gulf states. For India, the implications are profound. As the world’s third-largest oil consumer and importer of over 85% of its crude requirements, India remains acutely vulnerable to external price shocks. A sustained rise in oil prices directly widens the Current Account Deficit (CAD), increases the import bill, and exerts upward pressure on the rupee. Higher fuel prices cascade into transportation, logistics, and agricultural input costs, fuelling retail inflation — a key concern for the Reserve Bank of India (RBI) in its monetary policy decisions under the Flexible Inflation Targeting Framework (FITF), mandated by the RBI Act, 1934 (as amended in 2016). The government’s fiscal space is also constrained; while excise duties on petrol and diesel were cut in 2022 to cushion consumers, a prolonged spike may force a re-evaluation of revenue-expenditure priorities under the Fiscal Responsibility and Budget Management (FRBM) Act, 2003. Constitutionally, energy security falls under the Union List (Entry 53: Regulation and development of oilfields and mineral oil resources; Entry 54: Regulation of mines and mineral development), empowering the Centre to legislate on petroleum. The Petroleum and Natural Gas Regulatory Board Act, 2006, and the Oilfields (Regulation and Development) Act, 1948, provide the statutory framework. However, the strategic dimension — safeguarding supply routes — involves Article 246 read with the Union List and the executive power of the Union under Article 73, enabling diplomatic and naval engagement. India’s deployment of warships in the Gulf of Aden and participation in the Combined Maritime Forces (CMF) reflect this constitutional mandate. Geopolitically, the crisis tests India’s delicate balancing act: maintaining energy ties with Iran (despite US sanctions), deepening defence and energy cooperation with the US and Gulf nations, and advocating for a rules-based maritime order. The Chabahar Port agreement with Iran, aimed at bypassing Pakistan for access to Afghanistan and Central Asia, now faces renewed uncertainty. Meanwhile, India’s Strategic Petroleum Reserves (SPRs) at Visakhapatnam, Mangaluru, and Padur — with a combined capacity of 5.33 million tonnes — offer only about 9.5 days of consumption cover, highlighting the need for expansion as recommended by the Kelkar Committee (2014). Looking ahead, if tensions escalate and prices breach $120, India may face a twin deficit problem (fiscal and current account), potential fuel subsidies revival, and pressure on the RBI to hike repo rates — risking growth. The government might accelerate its energy transition push: ethanol blending (targeting E20 by 2025), green hydrogen mission, and domestic exploration under the Open Acreage Licensing Policy (OALPL). Ultimately, this crisis reaffirms that energy security is not merely an economic issue but a core national security imperative, demanding integrated policy across diplomacy, defence, and domestic reform.