Rising crude prices may weigh on CAD

Mildly affect growth, inflation, say economists

- ASIT RANJAN MISHRA

A sharp rise in global crude oil prices, triggered by intensifying conflict between Israel and Iran, is likely to put pressure on India's current account deficit (CAD) and the rupee, economists have said. But the growth-inflation dynamics are unlikely to be impacted significantly, if petroleum prices remain rangebound.

India, which imports more than 85 per cent of its crude oil requirements, remains highly sensitive to global energy-market fluctuations. Brent crude has jumped from $60-61 per barrel in May to about $75 per barrel, while the Indian basket rose to $73.1 as on June 13 from $64 last month, according to data from the Ministry of Petroleum.

The macroeconomic impact depends on whether oil prices remain elevated, said Sakshi Gupta, principal economist, HDFC Bank. "If oil prices rise and sustain above $80 per barrel, this could lead to an upward revision to our CAD forecast for FY26 by 30-40 basis points."