Oil prices remain above $100 despite temporary supply relief from Iraq deal
Prolonged geopolitical tensions risk higher inflation, weaker consumption and slower economic growth
India faces rising import bill and widening deficit amid crude dependence
Oil prices fell more than $2 per barrel on March 18, easing the previous day's sharp gains after the Iraqi government and Kurdish authorities agreed to resume oil exports via Turkey's Ceyhan port, reported Reuters.
But with no signs of a de-escalation of the Iran conflict, which has left oil exports from the Middle East largely halted, Brent futures prices have settled above $100 per barrel for the prior four consecutive sessions.
2 March 2026
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LSEG senior analyst Anh Pham told Reuters that the news provided some relief to the market. “Any additional volume finding its way back to the market is valuable under the current situation, so prices moved down to reflect that," Pham stated.
Commenting on the price of crude oil, VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said that despite the uncertainty regarding the war, markets have staged a bounce back. One factor that enabled this bounce back is crude remaining around the $102 level and fears of spiking above $120 not materialising.
“The near-term scenario will be one of markets responding mildly positively to some good news and negatively to bad news. Despite being sustained sellers in the market, FIIs have been selectively buying in some sectors like telecom. This partly explains the resilience in telecom stocks,” he shared.
He further underscored that there is a portfolio churn happening away from IT and highly valued FMCG stocks towards telecom, pharmaceuticals, defence and select financials. “Market leaders and fancied stocks in these segments will continue to be resilient even in a choppy market,” he asserted.
Meanwhile, a March 2026 report published by BofA Securities noted that while oil price shocks tend to create short-term volatility in financial markets, their broader macroeconomic impact depends on duration and transmission channels. The company noted in its most recent report that prolonged spikes, particularly above $100 per barrel, can start to negatively impact consumption, corporate margins, and fiscal balances in economies that import oil, such as India. “Geopolitical risk has crystallised as US-Israel strikes on Iran sent oil prices and volatility sharply higher,” the BofA Securities report stated, adding that prolonged disruptions could exert renewed pressure on inflation and growth.
Crude Over $100 per Barrel
The crisis in West Asia has surged the global crude prices to over $100 per barrel until March 17, from $65 per barrel in the period before the conflict began on February 28. According to Business Standard, at least three factors will ensure prices remain at the current level for some time. These include the ongoing attacks on vital gas and oil infrastructure in the area, the allies' muted reaction to the US's plans to jointly escort commercial vessels through the Strait of Hormuz, and the limited benefits of the International Energy Agency (IEA) member nations' release of strategic oil volumes.
Given this, the most important question facing India, the third-largest energy consumer in the world, which imports nearly 90% of its crude needs, is what a $100 per barrel crude scenario entails and its long-term impact on the country’s economy and energy security.
Due to the escalating tensions around Iran, there is a risk that the Strait of Hormuz (a key route for oil shipments) could face disruptions. This matters for India because a large share of its oil and trade comes from West Asia. India may have to spend more on imports, increasing its trade deficit called the current account deficit (CAD).
Citing experts, Business Standard reported that a $10 per barrel increase in the average price of crude oil for the year would raise the country’s CAD by 30–40 basis points. Higher oil prices could push up inflation, reduce consumption and slow GDP growth.
Economic Impact of Oil Shock
Global oil markets remain highly sensitive to West Asia tensions, with Brent crude breaching $100 per barrel amid supply disruption fears, reported Reuters.
The International Energy Agency (IEA) report published on March 12 has warned that even limited disruptions in the Strait of Hormuz can tighten supply and sustain elevated prices despite strategic reserve releases. If oil prices hold near $100 per barrel through the next financial year, GDP growth could fall to 6.6% and inflation could rise to 4.1%, the research department at the State Bank of India said in a report on March 7.
If oil prices average $130 per barrel, GDP growth could plummet to 6%, Reuters reported citing Elara Securities. This would amplify risks to growth, consumption and macroeconomic stability over the medium term.
