Triple Alert for India: Petrol and Diesel Prices Could Surge Amid Global Crises The Indian economy faces a potential triple threat as global tensions in the Middle East and supply chain disruptions threaten to drive up petrol and diesel prices, exacerbate inflation, and weaken the rupee. Former IMF deputy managing director Gita Gopinath has issued urgent warnings, highlighting the risks of prolonged conflict in the region and its cascading effects on India’s energy security and economic stability. Gopinath emphasized that the Middle East conflict, particularly the ongoing tensions between the U.S. and Iran, could lead to a prolonged disruption in oil supplies. This, she warned, could push crude oil prices to as high as $140 per barrel, with the current crisis already causing significant volatility in global energy markets. If the situation persists beyond June, India could face severe economic repercussions, including sharper inflation, slower growth, and a deeper strain on its balance of payments. The crisis has already begun to impact India’s energy landscape. The country relies heavily on Middle Eastern oil imports, and the Hormuz Strait’s strategic importance has made it a focal point of geopolitical tensions. Gopinath noted that the disruption has triggered a global supply chain crisis, affecting not only crude oil but also liquefied natural gas (LNG), fertilizers, and LPG. These shortages have driven up prices, with India’s fuel costs already rising sharply. In May alone, petrol and diesel prices in India surged by 3 rupees per liter on May 15 and an additional 90 paise per liter on May 19. Experts predict further hikes, with some forecasting increases of 7 to 9 rupees per liter, though these may not occur simultaneously.#middle_east #india #imf #hormuz_strait #gita_gopinath
Iran-Israel War and Oil Price Volatility Could Cut India's GDP Growth By Up To 1% Gita Gopinath, former chief economist of the International Monetary Fund and Harvard professor, warned that the ongoing conflict between Iran and Israel is already affecting India's GDP growth. Speaking to NDTV, she highlighted how rising oil prices could shave off between 0.5 and 1 percentage point from India's economic expansion. The IMF had previously revised its India GDP forecast for fiscal year 2026 to 7.3%, citing strong momentum and third-quarter performance. However, Gopinath cautioned that a significant drop in oil prices could undermine this projection. She noted that if Brent crude oil averages around $85 per barrel for the rest of the year, it could reduce India's growth by half a percentage point. At $100 per barrel, the impact could be nearly one percentage point. Gopinath emphasized that the government's handling of fuel subsidies plays a critical role in mitigating inflationary pressures. She pointed out that Indian fuel prices have remained stable since most of the oil price shock has been absorbed by oil companies. However, she warned that this is not a sustainable solution. "If oil stays at current prices for a few more weeks, prices should go up even in India," she said, adding that prolonged high oil prices could strain the fiscal deficit and balance of payments. The crisis has also raised concerns about food inflation, as Gopinath noted that food prices typically lag energy costs by six months. She highlighted the impact on fertiliser prices, which are heavily reliant on Gulf imports. Around 63% of India's nitrogen fertiliser, including urea and ammonia, and 32% of di-ammonium phosphate, comes from the Gulf, making the region a critical supplier.#iran #israel #strait_of_hormuz #imf #gita_gopinath
