Crude oil: Brent tops $110 for a moment, settles at $108.79 as Hormuz risk lingers

Oil prices swung sharply. Brent crude, the global benchmark, briefly climbed above $110 a barrel on Tuesday, its highest in five months, then settled 0.69% lower at $108.79. US crude (WTI, December contract) ended at $98.28. Early on Wednesday Brent was up about 1.1% at $110.03, according to Reuters.

The reason is the Strait of Hormuz, a narrow sea route between Iran and Oman that carries a large share of the world's oil. Reports of tanker attacks there keep a 'risk premium' in prices: buyers pay extra today in case supply gets disrupted tomorrow. Prices eased during the US session as traders focused on strong company earnings and lower bond yields.

India imports more than 85% of the crude it uses, so every $10 rise in oil costs the country billions of dollars a year and pushes up the import bill. Worked example: if Brent stays near $110 instead of $100, oil companies' costs per barrel rise about 10%, and that pressure eventually shows up in fuel, transport and plastic prices if it lasts.

Key takeaway: oil near $110 is the biggest outside risk for Indian inflation and the rupee this week.