Energy security: India may face risk with crude prices nearing $100/bbl, says experts
Virendra Pandit
New Delhi: Geopolitical tensions because of the US-Iran war in West Asia and the Russia-Ukraine war, supply risks and OPEC+ production discipline are expected to keep oil prices elevated, posing challenges for India’s growth and corporate earnings, experts said on Thursday.
Brent crude was trading near USD 98 per barrel on Thursday, with analysts warning that sustained prices above USD 100 could widen India’s current account deficit, weaken the rupee and push inflation to 4.1 per cent, the media reported.
As Brent crude neared USD 98 per barrel on Thursday, with a likelihood of crossing the USD 100-per-barrel mark as seen in March, India’s current account deficit is expected to widen, while inflation could increase to 4.1 per cent, according to analysts.
Brent crude was trading at around USD 98 per barrel while crude oil was trading at around USD 88.06 per barrel, the reports said.
Geopolitical risks
According to energy market experts, the continued crude oil and gas disruptions with elevated geopolitical risk is overlaying a recovery in the chips and AI trade. With Brent at USD 98, and with Iran-supported Houthis striking Saudi tankers in the Red Sea, oil prices seem headed to USD 100.
“Peace hopes have reduced as US Secretary of State Marco Rubio said the Iranians are not interested in peace,” an expert commented.
“Brent crude had already crossed USD 100/barrel in early March 2026 and could remain at or above this level in the near term,” another said.
Major forecasters, including Goldman Sachs, see prices remaining above USD 100 and up to USD 120 through 2026, if the Strait of Hormuz disruptions persist. The outlook is uncertain.
Escalation of the ongoing conflict in West Asia and continued OPEC+ supply discipline poses upside risks, while demand destruction, a global slowdown and coordinated strategic petroleum reserve releases could limit the rise.
Impact on India
Noting that India imports nearly 85-90 per cent of its crude requirement is particularly vulnerable to sustained oil prices above USD 100, an official said, “Including freight and war-risk premia, its effective cost could be USD 115/barrel. Accordingly, India’s import bill will increase and current account deficit will widen which will further push the rupee downwards.
“If crude averages USD 100 for a year, the GDP growth could fall to 6.6 per cent and inflation rise to 4.1 per cent. Every USD 10/barrel increase could add nearly USD 20 billion–around 0.5 per cent of GDP–to the CAD and shave 15-50 basis points off growth. Higher oil prices would also strain fiscal balances, compress corporate margins and delay an earnings recovery.”
