New Delhi: A wave of attacks, accidents, and escalating conflicts across key energy-producing regions has triggered what could become the largest disruption in global oil supply, with prices surging past $100 per barrel and fears of a prolonged crisis mounting.
Addressing the Rajya Sabha, Prime Minister Narendra Modi warned that the fallout from the ongoing conflict in the Middle East would have long-term consequences for India, particularly in the supply of crude oil, natural gas, and petrochemicals.
Middle East conflict fuels crisis
At the heart of the disruption is the intensifying conflict involving Iran, Israel, and US interests in the Gulf. A key flashpoint remains the Strait of Hormuz, a vital shipping route that carries roughly a fifth of the world’s oil supply.
Iran’s reported closure of the passage, combined with tit-for-tat strikes on critical infrastructure, has severely disrupted energy flows. Israeli strikes on Iran’s South Pars gas field — the world’s largest — triggered retaliatory attacks across the Gulf.
Facilities in Qatar, Saudi Arabia, and Kuwait have all suffered damage. The LNG hub at Ras Laffan Industrial City in Qatar, one of the world’s largest gas complexes, saw major fires and production halts, potentially cutting global LNG supply significantly for years.
Russia-Ukraine war adds to supply strain
The ongoing Russia-Ukraine war has further compounded the crisis, with Ukrainian drone strikes targeting Russian refineries and export terminals.
Key facilities, including Rosneft’s Saratov refinery and oil terminals at Primorsk and Ufa, have been hit in recent days. These attacks aim to disrupt fuel supplies for Russia’s military but are also impacting global oil exports.
Russia, a major supplier to India, has been attempting to maintain exports despite the damage, with Indian refiners increasingly relying on discounted Russian crude.
US refinery outage worsens supply concerns
In the United States, a major industrial accident has added to the turmoil. A fire and explosion at a Valero-operated refinery in Port Arthur, Texas, forced a complete shutdown of one of the country’s largest refining facilities.
The plant, capable of processing around 435,000 barrels per day, plays a key role in producing petrol, diesel, and jet fuel. Its outage has tightened supply at a time when US exports — including shipments to India — have been rising steadily.
Oil prices surge above $100
The combined impact of these disruptions has sent global energy markets into volatility. Brent Crude briefly spiked to $119 per barrel before stabilising above $100, a sharp jump from pre-conflict levels near $70.
Despite a temporary dip following comments by Donald Trump suggesting diplomatic outreach, prices quickly rebounded as supply concerns persisted.
‘Biggest disruption in history’
The International Energy Agency has described the current situation as “the largest supply disruption in the history of the global oil market,” estimating a shortfall of nearly 8 million barrels per day in March.
Repeated attacks on infrastructure, especially in the Gulf, could delay rebuilding efforts for years, raising the risk of sustained shortages in both oil and liquefied natural gas.
India faces growing energy challenge
India, which imports a significant portion of its energy needs, faces a dual challenge. With flows through the Strait of Hormuz disrupted, dependence on Russian and US crude is likely to increase.
However, continued strikes on Russian infrastructure and outages in US refineries could limit supply options, putting pressure on domestic fuel prices and inflation.
A prolonged crisis looms
Analysts warn that without urgent diplomatic de-escalation, the overlapping crises in the Middle East, Eastern Europe, and North America could trigger a prolonged global energy crunch.
The ripple effects could extend beyond fuel prices, impacting industries, trade, and economic growth worldwide.