Oil Prices Jump As UAE Drone Strike And Iran Tensions Trigger Fuel Rate Hike In India

Oil prices jumped more than 2% and Indian fuel prices also moved higher, as a drone strike near the Barakah nuclear plant in the UAE and renewed tensions involving Iran raised fresh concerns about global crude supplies and deepened the ongoing energy crisis affecting importing countries such as India.

Oil marketing companies in India increased petrol and diesel prices by ₹3 per litre on 15 May, ending a two-year freeze on rates. Petrol in the national capital now costs ₹97.77 per litre, while diesel is priced at ₹90.67 per litre, reflecting sustained pressure from expensive imported crude.

Oil prices and fuel prices: Global benchmarks surge after UAE drone strike

International benchmarks strengthened early on Monday following the incident in the UAE. At 7:20 am, the July Brent contract on the Intercontinental Exchange traded at $111.56 per barrel, up 2.18% from the last close. On the NYMEX, the June West Texas Intermediate contract gained 2.64% to $108.20 per barrel.

The increase followed what the UAE described as a "dangerous escalation" after a drone attack triggered a fire close to the Barakah Nuclear Power Plant in Abu Dhabi on Sunday. Authorities stated that the blaze started near an electrical facility adjacent to the nuclear site, but reported no casualties.

Oil prices and fuel prices: Details of the Barakah incident and regional security

According to a BBC report, investigators are still trying to trace the origin of the drones. Officials said that air defences brought down two drones, while a third hit an electrical generator "outside the inner perimeter" of the Barakah Nuclear Power Plant, causing a fire but not affecting radiological safety levels, as confirmed by local agencies.

Regional tensions were not limited to the UAE. Saudi Arabia reported intercepting three drones on Sunday as well, adding to worries over security of energy infrastructure in West Asia. Such incidents have revived fears of further disruption in a region that already plays a critical role in seaborne oil trade.

Oil prices and fuel prices: US–Iran standoff and supply forecasts

Markets were further unsettled by comments from US president Donald Trump, who renewed pressure on Iran over stalled talks. Posting on Truth Social, Trump wrote: "For Iran, the Clock is Ticking, and they better get moving, FAST, or there won't be anything left of them," followed by, "TIME IS OF THE ESSENCE!"

Although a fragile ceasefire has been in place since April, tensions between Washington and Tehran remain high. Iran’s blockade of the Strait of Hormuz, along with the US administration’s naval blockade of Iranian ports, is still affecting about 20% of global energy trade that passes through the crucial waterway and related routes.

The International Energy Agency, in the May edition of its monthly oil market report, warned that the market is likely to stay heavily undersupplied until the end of the third quarter of 2026, even if hostilities ease by early June. The agency highlighted persistent production losses and constrained exports from key producers.

The IEA estimated a present shortfall of around 6 million barrels per day in global supply. It said cumulative disruptions have already removed more than 1 billion barrels from the market and projected that global output could drop by 3.9 million barrels per day across 2026, if current trends continue.

India, which relies heavily on imported crude, is directly exposed to these shifts. The price of the India basket of crude stood at $108.36 per barrel on 14 May. This basket combines Sweet grade Brent Dated and Sour grade Oman and Dubai crude, mirroring the typical import mix handled by Indian refineries.

Indicator	Value	Date / Contract
Brent crude price	$111.56 per barrel	July contract, 7:20 am
WTI crude price	$108.20 per barrel	June contract, 7:20 am
India basket crude price	$108.36 per barrel	14 May
Global supply shortfall	6 million barrels per day	IEA May report
Potential 2026 output loss	3.9 million barrels per day	IEA projection

The conflict’s impact on Indian consumers is now visible at fuel stations, as higher crude costs feed into domestic prices after a prolonged pause. The situation remains linked to both regional security near key energy assets and the unresolved tensions between Iran and the US that continue to strain global oil balances.

Rituraj Baruah, a special correspondent at Mint, has covered energy, housing, urban affairs, heavy industries and small businesses for about eight years, reporting earlier on commodities, stock markets, insolvency and real estate at Cogencis Information Services, Indo-Asian News Service and Inc42, and now tracks the evolving global and domestic energy landscape.