The ongoing conflict involving Iran, the United States, and Israel poses significant risks to India’s economy, with global institutions warning that the country is highly vulnerable to a surge in oil prices.
India imports nearly 90 percent of its crude oil requirements, with about half of the supply passing through the strategic Strait of Hormuz, which has become a flashpoint amid the conflict.
The immediate impact is already being felt domestically, with prices of liquefied petroleum gas rising from March 7. Domestic LPG cylinders have become costlier by Rs 60, while commercial cylinder prices have increased by Rs 115.
The Asian Development Bank warned that India’s crude oil reserves of roughly 100 million barrels are sufficient for only 40 to 45 days of consumption, making the country particularly vulnerable to supply disruptions.
In comparison, reserves in China can cover three to four months of consumption.
ADB Chief Economist Albert Park said disruptions could lead to higher energy prices, rising inflation, and increased financial market volatility, particularly in economies that rely heavily on oil imports.
The agency also noted that shipping disruptions, aviation rerouting, and supply chain delays could raise logistics costs and affect trade across Asia.
Moody’s Ratings also warned that India’s structural exposure to oil price shocks remains very high. It said costly energy imports could weaken the rupee, increase inflation, and worsen the current account balance.
Former NITI Aayog chief executive Amitabh Kant has previously said that every $10 per barrel increase in oil prices could add about $14 billion to India’s annual fuel import bill, which already stands at around $180 billion.
Meanwhile, industrial clusters in Gujarat are facing gas supply shortages after Gujarat Gas Ltd reported severe shortages of regasified liquefied natural gas due to the West Asia conflict.