Crude oil prices extended their rally for another session on Thursday and surged more than 3%, after a drone attack on a Saudi oil field near Aramco fanned supply fears. The attack on Shaybah field killed two people, although operations were not impacted.
Brent crude futures surged 2.95% to $112.03 a barrel, while US West Texas Intermediate crude was at $99.25 a barrel, up 2.16%.
The United States has also called for an evacuation of some personnel and family members from American embassies in the kingdom.
The global oil benchmark has soared approximately 80% this year after the US-Israel war on Iran caused the closure of the Strait of Hormuz and put key energy infrastructure under threat, disrupting supply massively.
Earlier, US Secretary of State Marco Rubio told American media that reaching a peace deal with Iran is extremely difficult and economic pressure will continue until Tehran stops targeting commercial ships in the Strait of Hormuz.
Whereas, Tehran's Foreign Minister Abbas Araghchi ruled out re-opening the Strait of Hormuz until Washington accepts their conditions. Iran also refused proposals to surrender an estimated 400kg of nuclear material to Russian custody.
Claims that US and Iran are close to an agreement were dismissed as 'inaccurate' on Tuesday. Initial reports claiming the former had knocked Brent off its five-month highs. Meanwhile, resurgence in armed hostilities between Russia and Ukraine has added on more strain to an already fragile supply chain.
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Physical markets have visibly felt the supply pinch with refined products such as petrol and diesel surging even more sharply than crude oil, adding to inflationary pressure and weighing on the global economy.
Last week, the Indian government raised windfall tax on exports of petrol, and reduced levies on diesel.
The tax on petrol export was hiked to 2.5 rupees ($0.0263) per litre from 0.5 rupees per litre, according to the notification. On the other hand, duty on diesel exports was slashed to 8.5 rupees per litre from 16 rupees per litre, effective October 16, the order said.
Windfall taxes on fuel exports were first imposed in July 2022 by the government, but they were withdrawn two years later. The duties were reintroduced in March 2026 to grapple with surging energy prices as the US-Israeli war on Iran waged on.
At present, the export taxes are reviewed every fortnight and adjusted in line with movements in international crude oil and petroleum product prices.
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