In today's piece, we talk about why crude oil crossed $110 per barrel, and what it actually
means for your money, your EMIs, and your portfolio.
Quick disclaimer before we begin. Stocks or sectors mentioned here are only for context
and not investment advice. Please do your own research or consult a registered financial
advisor before investing.
Now onto today's story.
The Story
On the morning of 28 February 2026, the US and Israel launched joint military strikes on Iran.
By the time markets opened on Monday, Brent crude had surged 20 per cent overnight. It briefly touched $119 per barrel. The rupee broke ₹92 against the dollar for the first time ever. The Nifty fell 4.6 per cent. And somewhere inside the finance ministry, someone was quietly redoing all the Budget math for FY27.
You have probably seen the headlines. You have probably also wondered what exactly this means for you personally.
So let us break it down.
First, why did oil prices spike so hard?
It all comes down to one narrow stretch of water.
The Strait of Hormuz is only 33 kilometres wide at its narrowest point. But roughly 20 million barrels of crude oil pass through it every single day. That is about one-fifth of the world's entire oil consumption.
When Iran responded to the strikes with attacks on US military bases in Qatar, Kuwait and Bahrain, tanker captains got nervous. Insurance companies got more nervous. War-risk insurance premiums for ships operating in the Gulf reportedly surged over 400 per cent in March 2026.
When it costs four times more to insure a tanker, fewer tankers sail. When fewer tankers sail, less oil moves. And when less oil moves, prices go up.
Simple as that.
Okay, but why does this matter so much for India specifically?
Because India is one of the most oil-dependent large economies on the planet.
We import nearly 85 to 88 per cent of all the crude oil we consume. That is roughly 4.5 million barrels every single day. And around half of that supply transits through the Strait of Hormuz.
So when oil prices rise, India does not just feel it. India feels it immediately, and deeply.
In FY25, India spent \(137 billion importing crude oil. In the first ten months of FY26 alone, we had already spent \)100 billion, when Brent was averaging around $66 a barrel.
Now imagine what happens when the average crosses $110.
ICRA's Chief Economist Aditi Nayar told Business Standard that every $10 increase in the average crude price adds $14 to $16 billion to India's net oil import bill. If oil averages $110 to $115 through FY27, the additional burden on India's import bill could be between $56 to $64 billion over the full year.
That is roughly ₹5 lakh crore more than the Budget assumed.
And that is just the oil bill. The ripple effects go further.
When India's import bill swells, something else happens too. India has to buy more US dollars to pay for that oil. More dollar demand means the rupee weakens.
On 20 March 2026, the rupee crossed ₹93 against the dollar for the first time in history. The RBI intervened repeatedly by selling dollars from its own reserves to slow the fall. It managed to slow the decline. But it could not stop it.
Here is what makes it especially painful. Every single dollar increase in crude oil prices raises India's import bill by roughly ₹16,000 crore. But if the rupee is also weaker at the same time, you are paying more rupees for each dollar, on top of the higher oil price itself.
It is a double hit.
And then there is the inflation question.
When crude prices rise, petrol and diesel prices tend to follow. Transport costs go up. Freight costs go up. Raw material costs across dozens of industries go up.
ICRA's analysis says every $10 per barrel increase adds 40 to 60 basis points to consumer price inflation and 80 to 100 basis points to wholesale price inflation, assuming fuel prices are passed on to consumers fully.
That means the vegetables you buy, the courier you send, the auto you take, all get slowly more expensive.
Which brings us to your EMIs.
For much of early 2026, the RBI had been steadily cutting rates. The repo rate had come down from 6.5 per cent to 5.25 per cent over several months. Inflation was under control. Another cut in April looked almost certain.
Then the war happened.
Experts say the April MPC rate cut is now effectively off the table. The RBI cannot cut rates when inflation is rising and the rupee is falling at the same time. Those two things pull in opposite directions.
"While rate easing in April is off the table, the real dilemma for the RBI will be about drawing the line between forex intervention and tolerance."
— Madhavi Arora, Chief Economist, Emkay Global Financial Services
If you were hoping for cheaper home loans or lower EMIs in the near term, that wait just got longer.
So what does this mean for your investments?
Here is where it gets interesting.
Not every sector bleeds during an oil shock. In fact, some actually benefit.
Companies like ONGC and Oil India produce crude oil domestically. When global prices rise, they earn more per barrel. So their revenues go up, not down.
Defence companies like HAL and BEL tend to do well during geopolitical tension. Governments spend more on defence. The Nifty Defence index actually rose 2.6 per cent between late February and early March while the broader Nifty fell 4.6 per cent.
IT companies earn their revenue in US dollars and spend in rupees. So a weaker rupee actually means their earnings look better when translated back into rupees.
And gold, as usual, plays its classic role. It is the thing people run to when everything else feels uncertain.
On the other side, aviation takes the sharpest hit. Aviation turbine fuel accounts for 35 to 40 per cent of an airline's total operating costs. When crude jumps, ATF prices follow almost immediately. IndiGo and Air India are both feeling that pressure right now.
Paint companies, tyre makers, and chemical companies all use crude-derived raw materials as key inputs. Their margins compress when oil rises. Passing the full cost on to customers immediately is not always possible without losing business.
And OMCs like IOCL, BPCL and HPCL are in an especially tricky position. Their crude input costs rise sharply. But they face informal pressure from the government to keep retail petrol and diesel prices stable. That squeeze lands directly on their profit margins.
There is also a wildcard in all of this that most people are missing.
Before the war, India was buying 1.71 million barrels of Russian crude every day in 2025 at a steep discount to Brent. That discount was quietly saving India billions every year.
But the US-India trade deal signed in February came with a condition. India agreed to reduce its Russian oil purchases. J.P. Morgan estimates India's pullback amounted to a loss of 600 to 800 thousand barrels per day of discounted supply.
The US did issue a 30-day waiver in early March allowing India to buy Russian crude stranded at sea. But that is a temporary fix. The underlying situation is that India has lost its cheapest source of supply at exactly the moment when the most disruptive source, the Middle East, is also under threat.
India's actual effective landed cost per barrel right now is almost certainly higher than what the Brent price headlines suggest.
So what should you actually do?
Honestly? Probably less than you think.
The instinct during moments like this is to either panic and sell everything, or rush in and "buy the dip" on every falling stock. Both tend to be mistakes.
ICICI Direct's research found that during the Russia-Ukraine conflict, Auto, IT, and Realty corrected 18 to 22 per cent. But once markets bottomed, the recovery over the following three months was led by Auto at 45 per cent, Metals at 35 per cent, and Financials at 30 per cent.
The people who recovered well were not the ones who timed the bottom perfectly. They were the ones who stayed invested in fundamentally strong businesses and did not let panic make their decisions for them.
If you have a long-term SIP running, keep it running. If you have surplus cash, investing gradually at current levels into quality diversified funds makes sense. If you hold quality businesses that have fallen simply because crude is up, the investment case has probably not fundamentally changed.
Keeping 10 to 15 per cent of your portfolio in gold, through ETFs or Sovereign Gold Bonds, is also a reasonable buffer when both the rupee and equity markets are under simultaneous pressure.
The question to keep watching is not the crude price on a particular day. It is whether the Strait of Hormuz reopens fully over the next 60 to 90 days. That is the variable that drives everything else.
One last thought.
India has been talking about energy security for decades. We have built solar parks, signed green hydrogen MoUs, and published renewable energy targets in every Budget since at least 2015.
But when a 33-kilometre waterway in West Asia gets disrupted, the rupee crosses ₹93, the import bill swells by ₹5 lakh crore, and the rate cut cycle pauses. Just like that.
The Strait of Hormuz is 33 kilometres wide. India's strategic oil reserve covers roughly 60 days.
The distance between those two facts is where India's energy policy has lived for thirty years.
It is worth asking, every single time this happens, whether anything actually changes afterward.
Until then…
If this helped you make sense of what is happening in oil markets and what it means for
your money, consider sharing it with someone who needs to read it.
This article is for educational purposes only. Not investment advice.
Happy Investing 😎
Nataraj Malavade
Investor, Trader, Author & Mentor
natarajmalavade.in
Sources
| # |
Publication |
Article |
Link |
| 1 |
Business Standard |
Crude at $115 could raise India's oil import bill by $64 billion |
Read |
| 2 |
Business Standard |
Crude soars to $119 on output cut, supply choke amid Iran war |
Read |
| 3 |
CNBC International |
India hit by high oil prices, flight cancellations amid Iran conflict |
Read |
| 4 |
J.P. Morgan Global Research |
Oil price forecast and Russian crude trade flow analysis |
Read |
| 5 |
Bloomberg |
India's Rupee at Record Low as Oil Spike Stokes Inflation Worry |
Read |
| 6 |
Business Standard |
Rupee falls to record low of 92.64 on importer demand |
Read |
| 7 |
Business Today |
West Asia war: Why RBI may hold rates in April MPC meet |
Read |
| 8 |
Business Today |
Rising crude, global tensions: Sector gainers and losers |
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| 9 |
Outlook Business |
How the West Asia conflict could hit India's economy |
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| 10 |
ICICI Direct Research |
Geopolitical impact on Indian stock market 2026 |
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| 11 |
Upstox / PTI |
Ex-Niti Aayog chief: every $10 rise costs India $14 billion |
Read |
| 12 |
Anand Rathi PMS |
US-Iran conflict 2026: India economy impact |
Read |
| 13 |
Business Standard |
India stares at steep rise in oil import bill |
Read |
| 14 |
Business Today |
West Asia crisis: Falling rupee and rising crude could change Budget math |
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Goodreturns |
Crude Oil Price Today, March 2026 |
Read |
