Should the already hit-hard-in-the-wallet Indian motorist have reason to be worried on the fossil fuel front? Global crude oil prices have shot up to a four-month high today  after the US air strike at the Baghdad Airport killed the head of the elite Quds Force and Iraqi militia commander Abu Mahdi al-Muhandis early Friday.

The Brent crude futures shot up $3 to hit a high of $69.16 a barrel. This is the highest level it has hit since September 17, 2019. Estimates indicate that if crude price rises by $1 per barrel, the net import bill will increase by Rs 3,029 crore. Further, if exchange rate rises by a rupee to a dollar, the net import bill will increase by Rs 2,473 crore. A senior executive from a State-run oil marketing company said, “We are keeping a tab on the situation.”

Stocks of Indian oil retail companies including Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOCL) opened lower in early trade before flat-lining.

Any escalation in the current US-Iran conflict will increase fuel prices in India. Generally, the retail fuel prices are maintained at a 14-day average after India adopted the daily pricing mechanism as a part of the fuel price deregulation.

According to Ajay Bodke, CEO of Mumbai-based portfolio management services, Prabhudas Lilladher, “Oil is likely to be on the boil. This is bad for large oil importing countries, especially those with large trade and current account deficit like India," Bodke was quoted as saying by news agency Reuters.

Earlier last year, global crude prices spiked over 19 percent to $71.95 per barrel after drone attacks on Saudi Arabia’s refineries by Houthi rebels on September 16, 2019.

According to Abhishek Bansal, founder and chairman of currency derivative and broking firm Abans Group, "Crude oil prices are likely to remain higher as nearly 65-70% of the world's oil reserves are there in the Middle East, and any geopolitical turmoil creates a supply threat to the world oil market."