Oil prices have surged over 12% following Israel’s military strikes on Iran, triggering concerns over inflation
Global Oil Shock – The Middle East crisis has once again rattled global markets, with oil prices skyrocketing after Israel launched airstrikes on Iranian military and nuclear sites. Brent crude surged by 12.2%, crossing $77 per barrel, while West Texas Intermediate (WTI) crude spiked 12.6%. The sudden price hike has raised concerns over inflation, rupee depreciation, and fuel price stability, with experts warning of severe economic repercussions.
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Why Are Oil Prices Rising?
The Middle East remains a critical hub for global oil production, and any military conflict in the region disrupts supply chains. The Strait of Hormuz, through which 20% of the world’s oil passes, is now at risk of blockades or retaliatory strikes, further escalating fears of shortages.
Impact on Inflation & Rupee Stability
India, which imports 80-85% of its crude oil, is particularly vulnerable to rising global oil prices. The sudden surge has already impacted the Indian rupee, which fell to ₹86.20 per dollar, its weakest level in two months. The Reserve Bank of India (RBI) intervened, selling U.S. dollars via state-run banks to stabilize the currency.
Higher oil prices lead to:
- Increased fuel costs, affecting transportation and logistics.
- Higher inflation, as production costs rise across industries.
- Pressure on government subsidies, potentially leading to a fuel price freeze.
Stock Market & Economic Fallout
The Indian stock market reacted sharply, with oil-sensitive sectors like aviation, paints, and adhesives witnessing declines. Shares of Bharat Petroleum, Indian Oil, and Hindustan Petroleum dropped by over 5% intraday, reflecting investor concerns.
Global Reactions & Future Outlook
Experts predict that if Iran retaliates, oil prices could remain elevated, further straining economies worldwide. The United Nations Security Council has called for an emergency meeting, while OPEC nations are monitoring the situation closely.
Conclusion – Global Oil Shock
As the Israel-Iran conflict unfolds, the world faces economic uncertainty, with oil prices soaring and inflationary pressures mounting. Governments and financial institutions must brace for volatility, ensuring stability in the face of geopolitical turmoil.
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