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India’s retail inflation had increased to 3.21% in February.
Due to tension in West Asia, crude oil prices are continuously increasing in the global market. According to rating agency CareAge Global, every $10 per barrel increase in crude oil prices can increase retail inflation in India by 60 basis points (0.60%).
Meanwhile, Donald Trump said that his priority is to capture Iran’s oil resources. After his statement, Brent crude crossed $ 116 per barrel today. According to CareAge Global, the increase in crude oil prices can have an impact on the Indian economy and the pockets of the common man.
India is largely dependent on West Asia for its oil needs, hence worsening of the situation there will put pressure on India’s current account deficit, GDP growth and the value of the rupee.
India’s retail inflation had increased to 3.21% in February.
Burden on oil companies increased, prices may increase soon
Revati Kasture, CEO of CareAge Global, said that every $10 increase in average crude oil prices could increase inflation by 60 basis points in FY2026-27. The main reason for this is the high weightage of fuel in the Consumer Price Index (CPI) basket.
Initially, oil marketing companies (OMCs) can bear this burden themselves, but if prices remain high for a long time, they will be forced to pass the burden on to consumers.
Trump said- snatching Iran’s oil is my favorite thing
Trump said that his favorite thing was to snatch Iran’s oil. He said that they have many options and they can easily take control of Kharg Island. It is Iran’s main oil export hub, from where about 90% of the country’s oil is exported.
Impact on rupee and current account deficit also
- According to the CareAge report, India’s current account deficit can also increase by 0.3% to 0.4% for every $10 increase in oil prices.
- Despite the challenges, India’s GDP growth is estimated at 6.5%-6.8% in FY2026-27. The economy is being supported by strong domestic demand.
- Investors are turning to the US dollar as a safe haven amid global uncertainty. Due to this, the dollar is strengthening and the pressure on the rupee is increasing.
- If India’s current account deficit increases further, the value of the rupee may decline further. Today the rupee is at an all-time low of 95.58 against the dollar.
- One-third of the total remittances received by India (money sent home from abroad) comes from Gulf countries. If there is a war or situation of tension for a long time, the labor market will be affected.
- Due to which remittance may reduce. Exports from this sector are expected to be worth $64 billion in FY2024-25, which may be affected by shipping delays and stress.
- The impact of expensive crude oil will not be limited to petrol and diesel only. Due to increase in the prices of LNG, the cost of making fertilizer will also increase.
- India imports 25% of its fertilizer needs from West Asia, so the government may have to increase the fertilizer subsidy budget to keep it affordable.
If oil crosses $120, there will be a global recession
Market analysts say that if oil prices go above $120, the risk of a worldwide recession will increase. Due to high prices, demand will reduce and inflation will go out of control.
51% of India’s total oil imports come from Gulf countries.
India is most dependent on West Asia for its crude oil needs. The sector accounted for 51% of India’s total crude oil and petroleum imports in the first 10 months of FY2025-26. India’s import bill is increasing rapidly due to increase in the price of crude oil.
Crude became costlier by 60% in March, 36 year record broken
Crude oil prices have surged nearly 60% so far in March, the biggest increase in a month since the 1990 Gulf War. At the end of February, Brent crude had closed at $72.48, which has now crossed $116.
Earlier in September 1990, during Saddam Hussein’s attack on Kuwait, oil prices had increased by 46% in a month. Experts believe that if the war does not end soon, prices may even go up to $150 to $200.
Oil prices rise due to Hormuz route being affected
Iran has almost closed the Hormuz Route. About 20% of the world’s oil and gas passes through this route. Due to its closure, the prices of not only oil but also aluminium, fertilizer and plastic have started rising drastically.
There is a danger of shortage of medicines and essential items in Britain and Europe as the cost of shipping has increased manifold.
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However, it later recovered a bit and closed at 94.78 at the end of trading. This is a slight strengthening of 7 paise against the dollar as compared to the previous closing price of 94.85. Read the full news…
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The Finance Ministry has released its Monthly Economic Review report for March 2026. According to this report, the pace of the Indian economy has now slowed down. The biggest reason for this is the ongoing tension in West Asia and rising prices of crude oil in the international market.
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