Global oil markets are entering a phase of heightened geopolitical risk as concerns around the Strait of Hormuz intensify, with brokerage firm Citi warning that Brent crude prices could climb to $120 per barrel if supply disruptions deepen amid the ongoing US-Israel-Iran conflict. The brokerage argued that markets are still not fully pricing in the scale of potential supply-side shocks and broader macroeconomic fallout linked to the crisis.

The Strait of Hormuz remains one of the world’s most critical energy chokepoints, handling nearly one-fifth of global crude and liquefied natural gas shipments under normal conditions. Any prolonged disruption in the corridor has immediate implications for global oil balances, freight costs, insurance premiums, and inflation trajectories across importing economies. Recent disruptions in maritime traffic and rising security concerns in the region have revived fears of a broader energy shock similar to historical geopolitical oil crises.

Citi’s projection adds to a growing list of global financial institutions revising oil assumptions upward due to persistent instability in the Middle East. Several brokerages and commodity analysts have already warned that current crude prices may not adequately reflect the probability of prolonged disruptions in Gulf energy exports. Barclays recently indicated that extended supply interruptions could push Brent beyond $100, while more severe disruption scenarios could drive prices materially higher.

The latest warning is significant because the market had earlier assumed that geopolitical tensions would remain contained and that alternative supply arrangements from OPEC members and strategic reserves would help absorb disruptions. However, logistical bottlenecks, shipping constraints, and uncertainty around regional escalation are now forcing markets to reassess those assumptions.

For India, the implications are substantial. India imports more than 80% of its crude oil requirements, making it highly sensitive to spikes in global energy prices. A sustained rise in Brent crude toward the $120 level would likely increase India’s import bill sharply, pressure the rupee, and complicate the Reserve Bank of India’s inflation management strategy.

Higher crude prices also tend to feed directly into transportation, manufacturing, aviation, chemicals, paints, and fertiliser costs. If oil prices remain elevated for a prolonged period, input cost pressures could re-emerge across multiple sectors just as Indian corporates were beginning to benefit from moderating commodity inflation.