What will be the impact of increasing tension in the Middle East on India? Know 5 big effects

New Delhi. The increasing tension between the US and Iran in the Middle East has created new concerns about the global energy market and international trade. If the conflict in the region deepens or maritime traffic in the Strait of Hormuz is affected, it could impact many economies of the world, including India. India imports a large share of its energy needs, so experts are keeping an eye on the potential economic impacts.

1. Oil and gas supply may be affected

The Strait of Hormuz is counted among the most important energy routes in the world. A major portion of India’s crude oil and LNG imports come through this route. If movement on this sea route is disrupted, the supply of oil and gas may be affected, due to which energy costs are likely to increase.

2. India’s import bill may increase

India buys most of its crude oil needs from abroad. In such a situation, the increase in the price of crude oil in the international market has a direct impact on the country’s import bill. If oil remains expensive for a long time, pressure on current account deficit and foreign exchange may also increase.

3. There may be pressure on fuel prices

If the prices of crude oil continue to rise in the global market, it may also affect the prices of petrol, diesel and LPG at the domestic level. However, changes in retail fuel prices also depend on many other factors and government policies, so no immediate increase can be confirmed.

4. Risk of rising inflation

The impact of increase in energy prices is not limited to fuel only. Increasing transportation costs may also increase the cost of food items, consumer goods and industrial products. Due to this, there is a possibility of pressure on retail inflation and the monetary policy of the Reserve Bank of India may also be affected.

5. Stock market and investors’ concerns

Increasing geopolitical tensions create an environment of uncertainty in global financial markets. At such times, investors stay away from risky investments and turn to safer options. Its effect may also be visible on the Indian stock market, where there is a possibility of increased volatility and selling.

What options does India have?

According to experts, India has taken several steps in the last few years towards diversifying sources of energy imports, increasing strategic petroleum reserves and developing alternative supply arrangements. This can help in reducing the impact of any possible global crisis to some extent. However, if tensions in West Asia persist for a long time, it could have an impact on both the global energy market and the Indian economy.