Oil Prices Climb as Barakah Drone Strike, US-Iran Tensions Elevate Global Supply Risks

Oil prices climbed over 2% after a drone strike near the Barakah nuclear plant. Fresh US–Iran tension also lifted supply risk worries. In India, petrol and diesel became costlier as imported crude stayed high. The moves added pressure on importing economies, including India, as the energy crisis continued.

Oil marketing companies raised pump prices by ₹3 per litre on 15 May. The increase ended a two-year pause on retail rate changes. Petrol in the national capital reached ₹97.77 per litre. Diesel rose to ₹90.67 per litre. The hike reflected sustained strain from expensive global crude.

International contracts strengthened early on Monday after the UAE incident. At 7:20 am, July Brent on the Intercontinental Exchange traded at $111.56 a barrel. It was up 2.18% from the prior close. On NYMEX, June West Texas Intermediate rose 2.64% to $108.20 a barrel.

The UAE called the event a "dangerous escalation" after Sunday’s attack. The drone strike triggered a fire close to the Barakah Nuclear Power Plant in Abu Dhabi. Authorities said the blaze began near an electrical facility beside the nuclear site. Officials reported no casualties from the incident.

A BBC report said investigators were still tracing the drones’ origin. Officials said air defences downed two drones. A third hit an electrical generator "outside the inner perimeter" of the Barakah Nuclear Power Plant. Local agencies said the fire did not change radiological safety levels.

Security concerns also extended beyond the UAE. Saudi Arabia said it intercepted three drones on Sunday. The incidents renewed fears over West Asian energy infrastructure. The region plays a key role in seaborne oil trade. Any disruption can tighten global supply and raise freight and insurance costs.

Oil prices and fuel prices: US–Iran standoff and IEA supply warning

Markets also reacted to comments from US president Donald Trump on Iran. 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,". Trump followed with: "TIME IS OF THE ESSENCE!"

A fragile ceasefire has held since April, yet Washington and Tehran remained at odds. Iran's blockade of the Strait of Hormuz and US naval blockade of Iranian ports were still in place. About 20% of global energy trade uses the waterway and connected routes. That risk fed into prices.

The International Energy Agency warned supply could stay tight until end-Q3 2026. The May oil market report said the market may remain heavily undersupplied. The IEA put the current shortfall near 6 million barrels per day. It said over 1 billion barrels were already removed. Output could drop 3.9 million bpd across 2026.

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

India remained exposed because crude imports dominate refinery feedstock. The India basket stood at $108.36 a barrel on 14 May. The basket blends Sweet grade Brent Dated with Sour grade Oman and Dubai. Higher input costs were then seen at petrol pumps after the long price freeze ended.

Developments around Barakah and wider drone activity kept traders focused on supply security. The US–Iran dispute also stayed central because of Hormuz shipping risks. With the IEA flagging a prolonged shortfall, crude remained costly for importers. In India, the ₹3 per litre rise showed how global shocks can pass through to retail fuel prices.