International oil benchmark Brent closed at $90.2 per barrel on Friday, July 31, gaining $3.4 or 3.9 per cent during the session. The global benchmark traded between $87.1 and $90.2 a barrel before settling at the day’s high. For the week, oil fell 8.7 per cent, reflecting a sharp reversal in sentiment after recent geopolitical tensions had pushed prices towards the $100 mark.
At the current level, Brent is up 47.7 per cent on a year-to-date basis. However, the benchmark remains 28.4 per cent below a four-year peak touched earlier this year.
Why did crude oil rise on Friday?
Oil prices gained from the previous day’s close of $86.9 after foreign media reports suggested that some tankers were forced to turn around in the Strait of Hormuz — a crucial sea route where disruptions have kept crude oil rates elevated for much of this year.
The reports prompted traders to reassess shipping flows through the key waterway, which remains central to the US-Iran conflict and the global oil market.
The Strait of Hormuz has been effectively closed amid reported violations of a fragile ceasefire between the US and Iran established earlier this month.
Normally, the waterway — which links the Gulf of Oman with the Persian Gulf and the Arabian Sea — handles around one-fifth of global oil and gas supplies, making any prolonged disruption a major concern for energy markets.
Strait of Hormuz remains key oil market trigger
The latest move in crude highlights how sensitive oil prices remain to developments around the Strait of Hormuz. Any further disruption to tanker movement could quickly revive concerns around global supply and push prices higher.
Analysts say the market is still weighing the possibility of easing geopolitical tensions against the risk of fresh disruptions.
For India, the Strait of Hormuz remains particularly important given the country’s dependence on imported crude.
India has successfully shielded itself from the crisis by ramping up domestic oil and gas production, diversifying imports and exporting domestically produced finished petroleum products.
India plans Rs 4 lakh crore oil, gas storage programme
The Indian government is also considering a Rs 4 lakh-crore programme to expand the country’s storage capacity and inventory buffers for crude oil, natural gas and LPG, sources told Zee Business.
Around Rs 2 lakh crore is likely to be allocated towards establishing infrastructure, while another Rs 2 lakh crore could go towards building inventories.
The Petroleum and Natural Gas Ministry is learnt to have started inter-ministerial consultations on the proposal.
The government is also planning to create a dedicated fund for the purpose, sources said.
The proposed expansion comes against the backdrop of heightened concerns around energy security and supply disruptions.
Petrol and diesel prices in India
In India, petrol and diesel retail prices are set mainly by oil marketing companies such as Indian Oil, BPCL and HPCL.
The pricing mechanism takes into account global fuel trends, exchange rates, freight, dealer commission and taxes. Retail prices are reviewed daily, with any revisions effected across fuel stations at 6 am.
A fall in global crude prices for just over a week is not necessarily enough to trigger a reduction in retail fuel prices, say sources.
In early July, Union Petroleum and Natural Gas Minister Hardeep Singh Puri said petrol and diesel prices could be reduced if international crude oil prices remained at lower levels for the next few weeks.
The indication was that policymakers were looking for a sustained decline in global crude rather than a short-lived fall.
