• Source:JND
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As tensions in the Middle East continue to escalate following the US and Israel’s coordinated attack on Iran, Tehran’s retaliatory attack on America’s assets in Gulf countries, and one of the biggest oil refineries in Saudi Arabia, has sparked concerns around crude oil supply and its rates. After Iranian missiles hit the Ras Tanura refinery, Saudi Arabia’s Aramco stopped the refinery operation, resulting in a significant surge in crude oil prices in a single and violent session.

Ras Tanura is a 550,000-barrel-per-day refinery and export hub of Saudi Arabia’s east coast. Meanwhile, the traffic from the Strait of Hormuz was largely stalled as shipowners preferred to stay away from escalating violent exchange between the US, Israel and Iran. Nearly one-fifth of the global oil supply passes through the Strait of Hormuz.

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Brent crude oil, the global pricing benchmark for crude oil, and West Texas Intermediate, WTI (the US’s main benchmark), experienced a dramatic surge in oil pricing in one trading session. Brent crude spiked around 9-13 per cent, reaching 81-82 dollars per barrel before settling around high 70 that nearly 79 dollars per barrel. WTI experience nearly 9 per cent spike, reaching 71-72 dollars per barrel.

What Is Ras Tanura

Ras Tanura is one of the Middle East’s largest oil refineries and a key path for the export of crude and fuel from Saudi Arabia. Even a temporary halt in work at Ras Tanura dramatically affects the pricing of oil. And when the suspension of the operation at Ras Tanura is layered with traffic at the Strait of Hormuz, the impact on the oil market is unavoidable.

The work suspension at Ras Tanura for a day, and shipping paralysis in the Strait of Hormuz is an ‘inflation nuke’, said a Toronto-based finance professional and crypto investor, Shah Faisal Shah. "550,000 barrels/day offline + a blocked Strait of Hormuz = A world running on empty,” NDTV quoted Faisal as arguing.

He further added, "Oil +10 per cent in a day = CPI +0.5% in a month,” explaining that a single-day surge of nearly 10 per cent in oil pricing due to an attack on oil infrastructure and slowed traffic in the Strait of Hormuz can result in a higher cost of fuel, transport, and other goods across the economy, translating to an increase of 0.5 percent in Consumer Price Index (CPI).

The relationship between a sudden spike in oil prices and India’s inflation is not directly proportional, but it depends on several factors, such as the duration of elevated crude prices and government cushioning of fuel costs.

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Why Prolonged Higher Prices Are RBI’s Delicate Moment

India’s headline inflation witnessed a significant reduction from 2.1 per cent in June 2025 to a historic low of 0.5 per cent in October 2025, staying under RBI’s 2 to 6 per cent band. However, the headline inflation of India touched 2.75 per cent in January under a revised data series.

Before the recent escalation in the Middle East, India enjoyed the rare mix of solid growth and subdued inflation. Costlier oil feeds into transport, food and manufacturing, making it harder for the RBI to ease rates later this year. Escalating tensions can result in pressure on both the rupee and the bond yield.


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