Saudi Arabia finds itself at the centre of a global oil storm it never sought, watching prices rise to levels that should boost revenues, but instead trigger
deep concern. According to a Wall Street Journal report citing Saudi oil officials, Riyadh is running worst-case scenarios where Brent crude could surge beyond $180 per barrel if the Iran conflict and disruptions to energy supplies persist into late April. Rather than welcome the rally, Saudi policymakers are wary. Extremely high oil prices risk destroying long-term demand, pushing the global economy into recession and casting the kingdom as a wartime profiteer. “Saudi Arabia generally does not like too rapid increases in oil, because that creates long-term market instability,” Umer Karim, an analyst at the King Faisal Center for Research and Islamic Studies, told The Wall Street Journal. Saudi Arabia’s preference, he noted, is for moderate price increases alongside stable market share. Saudi Aramco has not commented on the report.
Prices Surge as Conflict Disrupts Energy Flows
Since the conflict escalated on February 28, global oil markets have tightened sharply. Brent crude has climbed to around $119 per barrel following attacks on key energy infrastructure, including Iran’s strike on Qatar’s Ras Laffan facility, reported disruptions near Saudi Arabia’s Yanbu and continued threats to shipping in the Strait of Hormuz.
The Strait, a critical chokepoint, typically carries nearly 20% of global oil supplies.
Meanwhile, Gulf benchmarks linked to Oman crude, used to price Middle Eastern cargoes, have surged past $166 per barrel in recent trades, according to the WSJ report.
Some buyers are reportedly hesitant to rely on the volatile benchmark, though Saudi Aramco maintains it reflects real supply conditions.
Saudi light crude is already being sold to Asian buyers at about $125 per barrel via Red Sea routes. As inventories tighten, officials expect prices to climb further, potentially reaching $138–$140 soon, $150 by mid-April, and in extreme scenarios, between $165 and $180.
Energy consultancy Wood Mackenzie has warned that $200 oil is plausible in 2026. Rebecca Babin, a senior energy trader at CIBC Private Wealth, told the WSJ that under current conditions, $180 per barrel by June cannot be ruled out.
Global Economic Pain Already Visible
The price shock is already hitting consumers, particularly in the United States. According to AAA data cited in the report, gasoline prices have risen to about $3.88 per gallon from $2.93 a month ago, while diesel has jumped to roughly $5.10.
Philip Blancato, CEO of Ladenburg Asset Management, described rising fuel costs as “a tax on consumers and businesses,” forcing households to cut back on other spending.
US Federal Reserve Chair Jerome Powell has also acknowledged that higher oil prices could simultaneously strain growth, employment and inflation.
What This Means for India
For India, the stakes are particularly high. The country imports nearly 89% of its crude oil, a figure expected to approach 90% by FY26. This makes the economy highly vulnerable to global price shocks.
According to SBI estimates and rule-of-thumb modelling, every $10 increase in oil prices widens India’s current account deficit by around 30–40 basis points.
If crude rises to $150 - $180 per barrel and stays elevated:
- The current account deficit could exceed 3% of GDP
- The rupee could come under pressure
- Inflation could rise by over 1 percentage point
- GDP growth could slow by up to 1 percentage point
Such a scenario would put the Reserve Bank of India in a difficult position, whether to tighten monetary policy to control inflation or hold rates and risk further price pressures.
India does have some buffers. In 2022, the government absorbed nearly Rs 1 lakh crore in excise duty cuts to shield consumers. It has also increased imports of discounted Russian crude to diversify supply.
