Amid Israel-Iran war, will inflation in India rise if Tehran closes Strait of Hormuz? Report claims...

The ongoing war between Iran and Israel has caused crude oil prices to rise sharply. This rise could be concerning for India. If global oil prices continue to rise, petrol, diesel, and LPG prices in India may also increase. This could lead to a fresh surge in inflation.

The Indian government is closely monitoring the situation in the Strait of Hormuz, a vital route through which about 20% of the world’s oil supply passes. This strait is crucial for oil exports from countries like Saudi Arabia, UAE, and Iraq. Iran has threatened to block the Strait of Hormuz, which could further disrupt global oil supply/

According to Navbharat Times report, to reduce dependency on West Asia, India has diversified its oil sources. Reports say that India has recently increased oil imports from Russia. Since the Ukraine war began, India has bought more oil from Russia, which may help maintain steady supply even during geopolitical tensions.

However, the rise in crude prices is putting pressure on oil marketing companies. While they are earning less profit, changes in petrol and diesel prices seem unlikely in the short term due to recent adjustments in excise duties.

There are also growing concerns about gas supply. A large portion of India’s natural gas comes from Gulf countries. Any disruption could increase the prices of piped gas and CNG, raising production costs for industries. Though retail inflation dropped to 2.8% in May—its lowest in six years—future inflation could rise if fuel prices increase, putting pressure on policymakers.