The ongoing conflict in West Asia could have multiple economic implications for India, particularly through higher oil prices, disruptions in energy supply routes, and potential impacts on remittances and trade, according to a new report by SBI Research.
The report highlighted that while the immediate inflationary impact of the widening conflict in the Middle East may remain limited, prolonged tensions and supply chain disruptions could significantly affect global economic stability.
One of the major concerns for India is the potential impact on crude oil supplies if tensions disrupt traffic through the Strait of Hormuz, a critical global energy corridor.
The report noted, “India imports nearly 90 per cent of its crude oil requirements.
About two million barrels per day of this, out of 5.5 million, transits through the Strait of Hormuz.”Any closure or disruption in this route could lead to supply constraints and higher import costs for the country.
Nearly 20 per cent of the world’s crude oil passes through this narrow waterway, making it one of the most important oil transit chokepoints globally.
Global oil markets have already reacted to the rising tensions. Brent crude prices have surged from about US$58.92 per barrel in December 2025 and US$70.75 per barrel in late February 2026 to around USD 85.40 per barrel in early March, crossing USD 89 per barrel as geopolitical risks intensified.
Higher oil prices could have broader macroeconomic consequences for India. According to the SBI Research estimates, every USD 10 per barrel increase in crude oil prices could widen India’s current account deficit (CAD) by around 36 basis points. The rise in oil prices may also lead to cost-push inflation, increasing consumer price inflation by around 35-40 basis points.
SOURCE: ANI
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