Brent nears $110 a barrel as West Asia conflict deepens, Hormuz talks delayed

Crude prices rose significantly after postponed talks between Iran and Gulf states, amid escalating tensions from Houthi attacks on Saudi facilities.

New Delhi: Crude prices extended their rally on Monday after talks between Iran and other West Asian countries on operations in the Strait of Hormuz were postponed, while attacks by Houthi militia on a Saudi airbase added to concerns about further conflict in the Red Sea region.

The November contract of Brent crude on the Intercontinental Exchange was at $109 a barrel at around 6.40 pm, up 4.20% from its previous close. The October contract of West Texas Intermediate rose 4.42% to $104.47 a barrel on the New York Mercantile Exchange.

Al Jazeera reported that the Houthis had taken control of Yemen’s Red Sea coastline, consolidating their hold over the Bab al-Mandeb Strait, a key chokepoint for maritime traffic in the region. The waterway handles about 12% of global trade, including 11% of maritime oil trade.

Yemen’s Houthis said they launched a large-scale ballistic missile and drone attack on Saudi Arabia’s King Khalid Air Base in Khamis Mushait, according to Al Jazeera. Last week, the Houthi militia captured the Red Sea city of Mocha, widening its hold over the strategic Bab al-Mandeb Strait.

Separately, negotiations in Oman between Iran and Gulf Arab states were postponed at the request of some regional countries, according to Iranian media. The postponement followed an attack on an Iranian commercial cargo vessel that killed one person in the Strait of Hormuz.

The escalating hostilities in West Asia are raising the risk of supply disruptions, threatening to increase India’s crude import bill while adding to inflationary and fiscal pressures.

India, which imports about 90% of its crude oil, remains particularly exposed to sustained price increases. Estimates by Bank of Baroda show that a persistent $1 increase in crude prices can raise the country’s annual import bill by around ₹18,000 crore. At about $120 billion annually, India’s oil import bill accounts for about 17% to 25% of its total merchandise imports.

The pressure was building even before the latest surge. India’s crude oil import bill for the April-July period reached $63.37 billion, up 56% from a year earlier, and already represents more than half of the total oil import expenditure in the preceding financial year.

In August, India’s retail inflation rose to a 20-month high of 4.82%, driven by higher fuel and food prices, taking it above the Reserve Bank of India’s 4% target midpoint for the third consecutive month since January 2025. Wholesale inflation also edged up to 9.92% in August from 9.78% in July, according to government data released on Monday.

S&P Global Energy, in a recent analysis, said that prospects for a definitive resolution to the Iran conflict had dimmed and crude oil markets were settling into a prolonged new normal in which disruption risks are persistent rather than episodic.

It added that crude oil production in West Asia is unlikely to return to pre-war levels by the end of 2027.

As a result, West Asian crude oil and condensate exports are now expected to average about 10 million to 16 million barrels a day on a monthly basis through 2027, compared with about 20 million barrels a day before the war in January-February 2026. S&P Global Energy projected that crude oil prices would remain in the $80-$100-a-barrel range through 2027, with Dated Brent averaging around $90 or higher for the rest of 2026 and $86 next year.

About the Author

Rituraj Baruah is a special correspondent covering energy, housing, urban affairs, heavy industries and small businesses at Mint. He has reported on diverse sectors over the last eight years including, commodities and stocks market, insolvency and real estate; with previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.