Any escalation in the Iran-Israel conflict could impact India by way of costlier crude oil imports as geopolitical tensions in West Asia would bump up risk premiums, apart from fuelling concerns of potential supply disruptions from the oil-rich region. According to industry insiders, while the situation is still developing and it would take a few days to assess the real risk to regional and global oil flows, international oil prices could see high volatility in the immediate-to-near term.

India is the world’s third-largest consumer of crude oil and depends on imports to meet over 85 per cent of its requirement. Given the country’s extremely high import dependency, India’s economy is highly sensitive to oil price volatility. Apart from inflationary pressures, high oil prices have implications for India’s trade balance, foreign exchange reserves, the value of the rupee, and the overall health of the economy.

Any escalation in the Iran-Israel conflict could impact India by way of costlier crude oil imports as geopolitical tensions in West Asia would bump up risk premiums, apart from fuelling concerns of potential supply disruptions from the oil-rich region. According to industry insiders, while the situation is still developing and it would take a few days to assess the real risk to regional and global oil flows, international oil prices could see high volatility in the immediate-to-near term.

India is the world’s third-largest consumer of crude oil and depends on imports to meet over 85 per cent of its requirement. Given the country’s extremely high import dependency, India’s economy is highly sensitive to oil price volatility. Apart from inflationary pressures, high oil prices have implications for India’s trade balance, foreign exchange reserves, the value of the rupee, and the overall health of the economy.