New Delhi: With the US military starting its blockade of Iran's ports, around two million barrels of Iranian oil per day is expected to be shut out from the world's markets, tightening global supply and leading to a further rise in prices of petroleum products, according to reports. 

A complete blockade of the Strait of Hormuz may also impact LPG supplies for India, as over the past month the country managed to have at least eight LPG tankers safely crossed through the strait,” wrote Bineet Banka, an analyst tracking the sector at Nomura in a recent note.

US President Donald Trump has also announced the US will not allow any ships to pay a toll to Iran for passing through the Strait of Hormuz. While India has not paid any toll for its LPG ships that have just sailed through the Strait, it remains to be seen how the situation unfolds.

"As the conflict lingers on, the effectiveness of balancing lost supplies via Strategic Petroleum Reserves may gradually become ineffective, and that may be reflected in higher oil prices," Nomura said in its note.

Meanwhile, the US and Iran are reported to be considering another round of talks after negotiations in Pakistan's Islamabad, led by US Vice President JD Vance, reached a stalemate over the weekend. Crude oil prices, as a result, hit $107 a barrel (bbl) on Monday, before cooling off to below $100/bbl on Tuesday on renewed hopes of talks between the two nations.

In the last one week, Brent crude oil prices have surged 6.5 per cent to nearly $98/bbl now. As the latest peace talks between the US and Iran have failed to yield any result, Nomura sees an increased likelihood of higher war risk premium on oil prices. 

With President Trump now threatening to completely block the SoH for all inbound and outbound ships, Nomura expects the oil supply situation to deteriorate further.

Oil prices spiral up

The rise in oil prices in the last few weeks, Nomura said, has more than compensated for the fall in export volumes of Saudi Arabia, with its oil revenues rising 4 per cent year-on-year in March. Saudi Arabia, reports suggest, has achieved full oil flow capacity of 7mbpd on its East-West pipeline that bypasses the Strait of Hormuz and opens into the Red Sea.

"Assuming that 2mbpd is used by its refineries in the western coast, we might still expect higher export volumes from Saudi Arabia going forward (5mbpd) compared to what it did in March 2026 (4.4mbpd). The UAE also did relatively well as compared with other gulf countries, with a minor 3 per cent y-o-y drop in oil revenues," Nomura said.

Iran, according to Banka's estimates, has been the biggest beneficiary since the war broke out in terms oil revenues that rose 36 per cent y-o-y in March 2026 to $5.7 billion.