Crude oil markets remain volatile as traders monitor potential disruptions in the Strait of Hormuz, with broader economic implications for India and vulnerable economies worldwide amid geopolitical tensions and supply risks.
Crude oil markets are likely to remain unsettled next week as traders watch the Strait of Hormuz, where any shift in shipping conditions could quickly alter supply expectations, according to market observers in New Delhi. The latest price action has already reflected that uncertainty: Brent settled at $83.55 a barrel on Friday, still below the previous week’s close of $90.12, while US West Texas Intermediate ended at $78.18, down from $84.67 a week earlier.
The swings have been driven by changing hopes around a possible arrangement to reopen traffic through the waterway, one of the world’s most important oil transit routes. Prices fell early in the week after US President Donald Trump paused a planned strike on Iran in favour of diplomacy, then recovered as reports suggested progress towards a temporary shipping deal. Analysts said a confirmed reopening would probably ease prices further, but any fresh escalation could quickly rebuild a geopolitical risk premium.
The wider economic stakes are significant. A recent CRISIL report said higher oil prices have already fed into government borrowing costs and raised concerns about public finances in India, while also adding pressure to the rupee through foreign portfolio outflows and a wider trade deficit. CRISIL expects the currency to average 93.5 to the dollar in March 2027, but said a larger current account deficit in fiscal 2027 could leave the rupee vulnerable.
International agencies have also warned that Hormuz disruptions can ripple far beyond crude benchmarks. UNCTAD said supply shocks in the strait have pushed oil prices up sharply and can hit vulnerable economies especially hard, underscoring the need for international co-operation when transit routes are threatened. Market researchers at Kasikorn Research Centre have said a 10% rise in oil prices can lift inflation by about 0.4 percentage points and trim growth by 0.1 to 0.2 percentage points, illustrating why traders and policymakers are treating the current standoff as more than a short-term market event.
In India’s domestic market, MCX crude briefly slipped to about Rs 7,100 before recovering to close near Rs 7,400. Traders see Rs 7,500-Rs 7,550 as immediate resistance, with support around Rs 7,380-Rs 7,300; a break lower could open the way to Rs 7,250 and then Rs 7,100-Rs 7,000. The rupee has also firmed, with USD/INR settling near Rs 95.2 after touching about Rs 94.9. Analysts say the pair remains technically under pressure while it trades below a long-term rising trendline, though the outlook will still depend on the dollar, oil, foreign portfolio flows and events in the Gulf.
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