Iran’s recent ballistic missile strike on Israel have fuelled fears of a broader regional conflict across the Middle East, sending crude oil prices up by as much as 4 per cent overnight due to concerns over supply disruptions. As oil prices continue to rise, experts warned that India, which is heavily reliant on energy imports, could face significant economic challenges.
Sugandha Sachdeva, Founder of SSWealth Street, explained that for every $10 increase in oil prices, India’s inflation rises by about 0.3 per cent, while the current account deficit (CAD) widens by $12.5 billion, equivalent to roughly 43 basis points (bps) of gross domestic product (GDP).
“This can diminish consumer purchasing power as higher fuel costs drive up transportation and input expenses, leading to an overall increase in the prices of goods and services,” she said.
Jigar Trivedi, Senior Research Analyst for Currencies & Commodities at Reliance Securities, agreed with Sachdeva. He warned that rising oil prices would lead to a higher dollar outflow from India, further weakening the rupee.
Iran, a key OPEC (Oragnisation of the Petroleum Exporting Countries) member, exports approximately 1.7 million barrels of oil per day. Beyond its role as a global oil supplier, Iran’s strategic location near the Strait of Hormuz — through which major Persian Gulf energy producers such as Saudi Arabia, Qatar, and the UAE export their oil—heightening the risk of global energy supply disruptions, especially as tensions escalate. Iran’s missile strike followed Israeli military action in Lebanon, including a targeted killing of Hezbollah’s chief Hassan Nasrallah, has heightened concerns of further regional instability.
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