Crude Oil Price Today - May 12: Brent Crude Rises To $105.13 - Is Petrol Price Hike Unavoidable Now In India?

Global crude oil prices climbed sharply on Monday after former U.S. President Donald Trump warned that the fragile ceasefire efforts involving Iran were "on massive life support," reigniting fears of prolonged instability in West Asia and disruptions to global energy supplies.

U.S. benchmark WTI crude rose above $99 per barrel, while Brent crude - the global benchmark closely watched by India - surged past $105 a barrel. Oil prices have now jumped more than 40% since the U.S.-Israel conflict with Iran escalated earlier this year.

The fresh rally came after Trump dismissed Iran's latest proposal for ending hostilities as "garbage," while Israeli Prime Minister Benjamin Netanyahu signalled that military operations may continue until Iran's nuclear infrastructure is dismantled.

"There's still work to be done," Netanyahu said in an interview, adding to fears that tensions in the Middle East could intensify further and threaten critical oil shipping routes.

For India, the developments are particularly worrying.

Why Rising Crude Prices Matter to India

India imports more than 85% of its crude oil requirements, making the economy highly vulnerable to global oil shocks. Any sustained increase in crude prices directly impacts fuel costs, inflation, government finances and the rupee.

Despite global volatility, petrol and diesel prices in India have remained largely unchanged since 2022. Oil marketing companies (OMCs) have so far shielded consumers from sharp retail price hikes by absorbing losses and adjusting margins.
But that cushion is rapidly thinning.

Industry estimates suggest OMCs are currently bearing losses of nearly ₹30,000 crore every month by keeping domestic fuel prices below market-linked levels. Analysts say the burden may become unsustainable if Brent crude remains above the $100-mark for an extended period.

This has increased expectations that India could soon witness another round of fuel price hikes - though experts believe any increase is likely to be gradual rather than an immediate steep revision.

Inflation Risks Return

Higher fuel prices have a cascading effect across the Indian economy.

Transport costs rise, logistics become expensive and prices of essential commodities often increase. Economists warn that prolonged crude strength could complicate India's inflation management efforts at a time when food prices and household consumption remain sensitive.

A spike in oil prices also widens India's import bill and current account deficit, putting pressure on the rupee and increasing the government's subsidy burden.
Modi's Fuel Conservation Appeal Gains Significance

Against this backdrop, Prime Minister Narendra Modi's recent call urging citizens to reduce fuel consumption is being viewed through a sharper economic lens.

PM Modi had encouraged Indians to use public transport, adopt work-from-home practices wherever possible and avoid unnecessary travel abroad to reduce fuel demand and conserve energy resources.

Economists say the appeal reflects growing concern within policymaking circles over the possibility of a prolonged crude oil shock if geopolitical tensions in West Asia continue to escalate.

Markets Watching West Asia Closely

Energy markets remain highly sensitive to developments involving Iran, one of the world's major oil producers. Any disruption in supply routes through the Strait of Hormuz - a critical oil transit chokepoint - could trigger another spike in global crude prices.

For now, Indian consumers have been protected from the full impact of rising oil prices. But if geopolitical tensions persist and crude remains elevated, pressure on fuel retailers and the government could eventually translate into higher petrol and diesel prices at the pump.