Winning Bizness Desk
Mumbai. Rising tensions in West Asia have pushed global crude oil prices sharply higher, raising fresh concerns for India’s economy. Brent crude has crossed 116 dollars per barrel after recent geopolitical statements and supply fears. According to rating agency CareEdge Global, every 10 dollar increase in crude prices could raise India’s retail inflation by up to 0.60 percent. The impact is expected to be felt not just in fuel costs, but across household expenses.
Impact of crude rise on retail inflation
CareEdge Global estimates that inflation may rise significantly due to higher fuel costs in the consumer price index basket. In February, India’s retail inflation had already edged up to 3.21 percent. With crude prices climbing further, the pressure is likely to intensify. The agency’s CEO Revati Kasture said that in FY2026-27, each 10 dollar rise in crude could add 60 basis points to inflation, mainly because fuel carries a strong weight in inflation calculations.
Oil firms may pass burden to consumers
Initially, oil marketing companies may absorb the rising cost burden to avoid sudden price shocks. However, if crude prices remain elevated for a longer period, companies may have no option but to pass on the cost to consumers. This could lead to higher petrol and diesel prices, directly affecting transport costs and daily spending. The ripple effect may extend to food and essential goods.
Key economic risks emerging from oil surge
- Inflation may rise by around 0.60 percent
- Current account deficit may widen by 0.3 to 0.4 percent
- Rupee may weaken further against the dollar
- Import bill likely to increase sharply
- Pressure on household budgets may intensify
Pressure on rupee, growth and remittances
India depends heavily on West Asia for its oil needs, with around 51 percent of imports coming from the region in FY2025-26. Rising crude prices could widen the current account deficit and weaken the rupee, which has already touched a low of 95.58 against the dollar. At the same time, global uncertainty is pushing investors towards the US dollar, adding more pressure on emerging market currencies like the rupee. Despite these risks, GDP growth is expected to remain between 6.5 and 6.8 percent, supported by strong domestic demand.
Global tensions disrupt supply chains and trade
The situation has worsened after disruptions in the Strait of Hormuz, a key route for nearly 20 percent of global oil and gas supply. This has led to a sharp rise not only in oil prices but also in commodities like aluminium, fertilisers and plastics. Shipping costs have surged, raising fears of shortages in essential goods in parts of Europe and the UK. India may also face higher fertiliser costs, forcing the government to increase subsidies to keep prices stable.
Crude surge triggers wider economic concerns globally
- Crude prices have jumped nearly 60 percent in March
- Biggest monthly rise since 1990 Gulf War
- Prices may touch 150 to 200 dollars if tensions continue
- Risk of global recession if prices cross 120 dollars
- Demand may fall as inflation rises worldwide
Experts warn that if crude prices continue to rise beyond 120 dollars per barrel, the global economy could slip into a slowdown. Higher energy costs tend to reduce demand and increase inflation, creating a difficult cycle for both developed and developing economies. For India, the coming months will be crucial as it balances inflation control with growth stability amid rising global uncertainty.
