By: Rajesh Shah, MD of Euro Panel Products Limited.
The Indian Crude Basket averaged $63 per barrel in January 2026. By 18 March, it had reached $146.39, a rise of over 130% in seven weeks and the fastest sustained surge in the basket’s recorded history, according to the Petroleum Planning and Analysis Cell (PPAC). For India’s construction sector, which runs on materials tied directly or indirectly to crude oil, those numbers are not a headline. They are a cost revision arriving at every active project in the country.
Why India Absorbs This Harder Than Most
On 28 February 2026, following military escalations in the region, commercial shipping through the Strait of Hormuz effectively halted. The International Energy Agency called it the largest oil supply disruption in recorded history. Daily vessel transits fell from over 130 to fewer than 10, and ships rerouting around Africa add 10 to 14 days with substantially higher fuel and insurance charges per shipment. According to the ministry of petroleum & natural gas’s analysis cell, India imports over 85% of its crude oil, with an estimated 50 to 55% of that supply having transited the Strait. Since crude is priced in US Dollars, a spike in oil prices simultaneously weakens the Indian Rupee. Indian manufacturers face both at once: the commodity costs more, and the currency to buy it buys less.
The Freight Layer: When Logistics Becomes a Cost Driver
The Strait of Hormuz disruption has added a logistics cost sitting on top of every commodity price movement in the supply chain. With over 147 container ships unable to transit, major carriers rerouted around southern Africa, adding 10 to 14 days to every delivery and substantially higher fuel and insurance charges per shipment. Global freight market data recorded Capesize bulk carrier rates climbing from $9.80 to $12.20 per tonne in the conflict’s opening weeks. War-risk surcharges have raised the cost of insuring cargo through the region, and transshipment hubs at Colombo, Singapore, and Nhava Sheva face overflow congestion as diverted vessels compete for berth space, adding further delays on top. For a construction project, this means every imported material arrives later and at a higher landed cost than the original order anticipated.
Aluminium and Coatings: The Facade Cost Chain
The pressure on the facade and cladding materials runs through two channels. The first is aluminium, often described as solid electricity because energy accounts for approximately 40% of an ingot’s total production cost, making it directly exposed to global energy benchmarks. According to the London Metal Exchange (LME), aluminium stood at approximately $3,463 per metric tonne as of April 2026, a year-on-year increase of approximately 44%. For a material that forms the base substrate of composite panels, curtain wall systems, and aluminium roofing components, that is not a marginal adjustment. It is a structural repricing of the entire facade material category. The second channel is coatings. Every resin, solvent, and binder used in industrial coatings is a crude oil derivative, revised fortnightly by Indian oil companies as the crude price moves. When the crude basket moves from $63 to $146, coating input costs follow within weeks, not quarters.
What a Construction Project Actually Faces
A project that has locked in material budgets in December 2025 or January 2026 is operating against a cost reality that has shifted substantially. Aluminium, up 44% year-on-year at the London Metal Exchange, changes the economics of every facade and cladding specification. Coating material costs are on a fortnightly revision cycle. International shipments are running 10 to 14 days longer than contracted lead times, with higher freight and insurance charges throughout. India’s leading property consultancy’s construction cost report, published in March 2026, projected a 3 to 5% rise in construction costs across all asset classes this year, and that was before the full weight of the Strait closure had reached procurement desks. Projects still mid-procurement are in a different cost environment than the one they were priced against.
India’s Position and the Industry Response
India has moved to limit the damage, expanding crude procurement from the United States, Russia, and West Africa to reduce dependence on any single supply corridor. Combined strategic reserves and state-run stockpiles provide approximately 74 days of import cover, giving the supply side time to adjust without an immediate fuel crisis. For the construction industry, the same holds for manufacturers who invested in domestic sourcing and integrated operations before the disruption. Their input costs are still rising, but not compounded by international logistics delays and importer premiums on top. The February 2026 disruption will not be the last. The materials that buildings depend on are globally priced and globally shipped. What this period has shown is the real cost of that exposure, and what shorter, domestic supply chains are worth when global routes stop working.