Market Brief: Energy Sector and Geopolitical Volatility Geopolitical tensions in the Middle East have reached a critical threshold, injecting a significant risk premium into global energy markets. As of February 20, 2026, the standoff between the United States and Iran has moved beyond rhetoric, with military posturing near the Strait of Hormuz triggering a sharp revaluation of crude oil. Global benchmarks have surged in response to stalled nuclear negotiations in Geneva. Brent crude has breached the $71 per barrel mark, a level not seen since mid-2025, while West Texas Intermediate (WTI) is trading near $66.50. Market analysts estimate that a "war premium" of approximately $13 per barrel is now embedded in these prices due to the potential for immediate supply shocks. The Strait of Hormuz remains the primary focal point for investors. This maritime chokepoint handles roughly 21 million barrels of oil per day, representing over 20% of global consumption. Recent live-fire naval drills by Iran and the deployment of U.S. aircraft carrier strike groups to the region have raised the probability of a military strike to an estimated 70%, according to some risk models. In the Indian equity markets, this volatility has created a clear divide between upstream explorers and downstream marketers. Upstream giants like ONGC and Oil India have seen their shares buoyed by the prospect of higher realization prices. ONGC stock recently climbed 3.80% to reach 274.65 INR, while Oil India remains a key beneficiary of the uptrend in exploration and production margins. Conversely, oil marketing companies (OMCs) are facing increased pressure. While firms like Indian Oil Corporation (IOCL) reported strong profits in the previous quarter—with a standalone net profit of 12,126 crore INR—rising crude costs threaten to squeeze future marketing margins. The ability of these firms to maintain profitability depends heavily on whether they can pass on these 4-5% price spikes to consumers. The broader economic impact of this energy surge is being closely monitored by central banks. If Brent continues its trajectory toward the $90-$100 range, it could reignite global inflation and delay anticipated interest rate cuts. For now, the market remains in a state of high alert, awaiting definitive signals from the White House regarding potential military intervention. [Strait of Hormuz Oil Tensions](https://www.google.com/search?q=https://www.youtube.com/watch%3Fv%3DFj-E_809S0Y) This video provides a detailed visual explanation of why the Strait of Hormuz is the world's most vital energy chokepoint and how its closure would impact global oil supplies.