Global oil prices have surged past $100 a barrel due to escalating Gulf conflicts disrupting supply chains
This is despite IEA's historic release of 400 million barrels from strategic reserves.
India is boosting domestic production and expanding crude sourcing to stabilise LPG supply.
Global oil prices surged past $100 a barrel on March 12, 2026 as escalating attacks on shipping and energy infrastructure in the Gulf offset a historic emergency oil release by the International Energy Agency (IEA), while the Indian government moved to stabilise domestic fuel supplies by boosting LPG production and widening crude sourcing.
Benchmark Brent crude was trading around $100.5 per barrel, up nearly 9-10 per cent on the day, while West Texas Intermediate climbed to about $95 per barrel, reflecting mounting fears of supply disruptions as the United States-Israel war with Iran intensifies.
The surge comes despite the IEA’s decision on March 11 to release 400 million barrels of crude oil from strategic reserves, the largest coordinated release in its history. At the same time, New Delhi has stepped up domestic LPG production, prioritised household consumption and expanded its crude import network to cushion the impact of disruptions in West Asia.
“The oil market challenges we are facing are unprecedented in scale,” IEA Executive Director Fatih Birol said in a statement. “IEA member countries have responded with an emergency collective action of unprecedented size.”
The planned release is more than double the 182-million-barrel emergency release in 2022 after Russia launched its invasion of Ukraine. IEA members collectively hold over 1.2 billion barrels of emergency oil stocks, with another 600 million barrels held by industry under government obligation.
However, analysts said the release may have limited impact. According to Macquarie analysts cited by news agency Reuters, the 400-million-barrel stockpile is roughly equivalent to four days of global oil production and about 16 days of crude flows through the Gulf, highlighting the scale of the disruption.
Meanwhile, Iran has outlined three key conditions to end the war — demands that could shape not only Middle East geopolitics but also the outlook for India’s economy, inflation and financial markets. First, it has called for an immediate halt to all military strikes by the US and Israel, insisting that negotiations can begin only after attacks stop. Second, Iran is seeking firm guarantees that such strikes will not be repeated, stressing that a temporary ceasefire would be insufficient without long-term security assurances. Third, it has demanded recognition of its sovereign rights and compensation for damages caused during the conflict.
Oil markets have been rattled since the United States and Israel launched military strikes on Iran on February 28, triggering retaliatory attacks and severe disruptions to maritime traffic in the Strait of Hormuz.
The narrow waterway between Iran and Oman carries roughly a fifth of global oil and gas shipments, making it one of the world’s most critical energy chokepoints.
Iran has effectively restricted passage through the strait by threatening ships linked to the US, Europe and Israel, while allowing limited movement for vessels deemed neutral. Iranian forces have also targeted oil fields and refineries in Gulf Arab states, raising fears of broader supply disruptions.
On March 11, the Thai-registered bulk carrier Mayuree Naree, bound for India’s Kandla Port in Gujarat, was struck by a projectile while transiting the strait. The impact triggered a fire on board and forced the crew to abandon the vessel.
Separately, explosive-laden boats set two tankers ablaze near Iraqi waters on March 12, prompting authorities to suspend some oil terminal operations.
Since the conflict began, Brent crude has surged by nearly 30–40 per cent, rising from about $72 per barrel before the war to above $100, after briefly touching $119 earlier this week.
Iran has warned that oil prices could reach $200 per barrel if the conflict escalates further.
Energy disruptions are spreading beyond oil markets. European natural gas futures have climbed toward €60 per megawatt-hour, partly due to uncertainty around LNG shipments from Qatar, a major exporter whose cargoes typically pass through the Strait of Hormuz.
About 13 million barrels of oil per day, roughly 31 per cent of global seaborne oil shipments, normally transit the strait, along with a large share of global liquefied natural gas, meaning even brief disruptions can ripple across global energy markets.
The Gulf crisis has begun affecting the liquefied petroleum gas market in India, which consumes about 31.3 million tonnes of LPG annually, with roughly 62 per cent imported, much of it typically shipped through the Strait of Hormuz.
Supplies of commercial LPG cylinders have tightened in several cities, affecting the hospitality sector. Restaurants in Delhi, Bengaluru, Hyderabad and Mumbai have warned that prolonged shortages could disrupt operations.
According to the National Restaurant Association of India, nearly 70-75 per cent of restaurants rely on LPG, and sustained disruptions could cost the industry Rs 1,200-1,300 crore per day.
In response, the government has stepped up domestic production and distribution measures.
An official from the Ministry of Petroleum and Natural Gas at an inter-ministerial briefing on March 11 said refineries have increased LPG production by around 25 per cent, with household consumers given priority.
Additional steps include:
Extending LPG booking intervals to 25 days from 21 days to prevent hoarding
Forming a committee of executives from Indian Oil Corporation, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited to review supply allocations for commercial users
Increasing monitoring under the Essential Commodities Act
Authorities are also exploring alternative LPG supplies from countries including Algeria, Australia, Canada and Norway.
Separately, the government has expanded India’s crude sourcing network from 27 to about 40 countries to ensure adequate supply. Two cargoes of crude oil and two LNG shipments are already being routed to India through alternative supply chains, officials said at an inter-ministerial briefing on March 11.
Uncertainty over the duration of the conflict persists. US President Donald Trump has said the war could end “very soon,” while also suggesting American forces have not yet “won enough”, leaving global energy markets bracing for further volatility.
Meanwhile, a new report by the Global Energy Monitor, released on March 12, said South Asia is preparing for a major expansion in liquefied natural gas (LNG) infrastructure even as the outlook for demand remains uncertain.
India, Bangladesh and Pakistan together have 110.7 million tonnes per annum (mtpa) of LNG import capacity in development, about 17 per cent of the global total, representing around $107 billion in potential investment in LNG terminals and gas pipelines. India accounts for the bulk of the expansion with 84.6 mtpa of planned import capacity, while Pakistan (12.1 mtpa) and Bangladesh (11.3 mtpa) are pursuing projects that could roughly double their current LNG import capacity.
The buildout is linked to expectations of a surge in global LNG supply later this decade, led by new export projects in the United States and Qatar. Industry forecasts from companies such as Shell plc project global LNG demand to grow about 60 per cent by 2040, while the International Energy Agency expects LNG demand in Pakistan and Bangladesh to rise about 60 per cent by 2030.
However, the report warns that price volatility, infrastructure bottlenecks and competition from coal and rapidly expanding renewable energy could limit LNG demand growth in the region, especially given that South Asian countries have historically cancelled or shelved two to three times more LNG import capacity than they have actually built.