On March 12, 2026, two oil tankers carrying roughly 3 million barrels of West Asian oil arrived in India, marking a significant development in the country’s energy supply amid ongoing geopolitical tensions. One of the tankers, the Liberia-flagged Shenlong, is transporting around 1 million barrels of crude oil from Saudi Arabia, while the other is an India-flagged VLCC carrying approximately 2 million barrels from Iraq.

The arrival of these tankers has raised hopes for more energy supplies to India, especially as the nation relies on imports for around 60% of its liquefied petroleum gas (LPG) requirement, with 90% of these imports passing through the strategically vital Strait of Hormuz.

Diplomatic Engagements and Energy Security

In light of the current situation, India is actively negotiating with Iran to ensure the safe passage of vessels headed to its shores. Randhir Jaiswal, the External Affairs Minister of India, noted, “The External Affairs Minister and the Foreign Minister of Iran have had three conversations in recent days.” This diplomatic engagement aims to keep the sea route open for Indian vessels, ensuring that shipments of crude oil and LPG continue without major disruption.

However, disruptions linked to the ongoing conflict involving the US, Israel, and Iran, along with instability around the Strait of Hormuz, have triggered a shortage of commercial LPG in India. Observers note that these developments have significantly affected the hospitality sector, which relies heavily on consistent LPG supplies.

On the same day, the Indian Oil Corporation (IOC) recorded a total traded volume of 56,34,938 shares, with its stock opening at ₹157.40, down 2.01% from the previous close of ₹160.63. The last traded price was ₹157.20, reflecting a day’s loss of 1.43%. IOC currently holds a market capitalization of ₹2,26,928 crores.

As the situation unfolds, the exact permission status from Iran for the two oil tankers to cross the Strait of Hormuz remains unclear. Additionally, the long-term implications of the current disruptions in LPG supply are uncertain. PM Modi has reportedly emphasized that the challenges faced are not unique to India, assuring that the government is prepared to handle any disruptions effectively.

Details remain unconfirmed.

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Oil prices have seen significant declines today, with Brent crude futures dropping $6.51, or 6.6%, to $92.45 a barrel. Similarly, US West Texas Intermediate (WTI) crude fell by $6.12, or 6.5%, to $88.65. This sharp decrease follows a period of volatility where oil prices surged almost 30% on Monday, crossing the $100-a-barrel mark, driven by escalating geopolitical tensions in the Middle East.

Causes Behind the Price Fluctuations

The recent fluctuations in oil prices can be attributed to a combination of factors, primarily stemming from the ongoing conflict in the Middle East. Iraq has slashed output at its key southern oilfields by 70%, reducing production to 1.3 million barrels per day. Additionally, Kuwait Petroleum Corporation has begun reducing output and declared force majeure, while Saudi Arabia has also started trimming production. These actions by major oil-producing nations have raised concerns about supply disruptions, further impacting market prices.

Market Reactions and Statements

In response to the surging oil prices, G7 countries have expressed readiness to take necessary measures to address the situation. Meanwhile, Iran’s Revolutionary Guards have issued warnings that they would not allow ‘one litre of oil’ to be exported from the region if US and Israeli strikes continue. This statement underscores the heightened tensions and the potential for further disruptions in oil supply.

Historical Context and Current Trends

Historically, the Strait of Hormuz has been a critical route for global oil transport, and any disruptions in this area can lead to significant price increases. Donald Trump has suggested that the ongoing conflict in the Middle East may come to an end soon, which could alleviate some concerns about prolonged supply disruptions. However, the market remains sensitive to developments in the region.

Expert Insights on Future Price Movements

Market analysts are closely monitoring the situation, with some experts noting that if the conflict continues for a longer period and oil shipments through the Strait of Hormuz are disrupted, prices could rise again. Apurva Sheth commented on the volatility, stating that the “Trump always chickens out (TACO) trade is back” following the crude oil price jump of more than 50% in just two sessions after escalations in the war.

Uncertainties and Future Developments

Despite the current price drops, uncertainties remain regarding the future trajectory of oil prices. The exact impact of diplomatic movements on oil prices is unclear, and future trends will largely depend on geopolitical developments and supply decisions made by oil-producing nations. Details remain unconfirmed, but the market is poised for further fluctuations as the situation evolves.

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