India Cannot Afford to Sleepwalk Through Another Oil Shock

As another geopolitical storm brews in the Middle East—this time between Israel and Iran—India finds itself yet again on the edge of an economic spillover it is ill-prepared for.

- R SURYAMURTHY

NEW DELHI: The headlines may be dominated by distant airstrikes and diplomatic stalemates, but let's not mistake geography for insulation. If Brent crude barrels past $80 and stays there, the consequences for India's economy won't be theoretical—they'll be painfully real.

Yes, Crisil Ratings and other forecasters are quick to assure us that the current impact is "limited." India's trade with Iran and Israel, after all, is a mere blip—less than 1% of our total trade volume. But to read the situation solely through a trade lens is to miss the forest for the trees. This is not about direct exposure; it's about indirect dependence. And India's single biggest vulnerability remains unaddressed: energy.

Nearly 85% of India's crude oil is imported, much of it routed through the Strait of Hormuz—a strategic choke-point Iran could disrupt without firing a single missile. Already, Brent crude has jumped 15% in June, reaching $76 per barrel. For a country where every $10 spike in oil prices can widen the current account deficit by 0.3% of GDP, this is not just volatility—it's a warning shot.