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Informist, Friday, Mar. 6, 2026

 

NEW DELHI – The ongoing war in West Asia is expected to impact India's economy as the country is heavily dependent on the region for crude oil and liquefied natural gas compared to its Asian peers, Moody's Ratings said in a research note. "Costly energy imports would weaken the rupee, raise inflation, worsen the current account balance and complicate monetary policy as well as fiscal management if they lead to expanded subsidies to help offset the economic shock," Moody's said. 

India imported 46% crude oil from West Asia as of 2024, Moody's said, citing data from the United Nations and the International Monetary Fund. India's crude imports made up 3.6% of the gross domestic product in 2024.

 

Moody's expects the conflict in West Asia to be "short-lived" and last just a few weeks. In such a scenario, crude oil prices are likely to be moderately elevated, with average Brent crude oil price seen in the range of $70-$80 per barrel in 2026, compared with $69 a barrel in 2025", Moody's said.

 

This would have a limited impact on the global economy, Moody's said. "Experience suggests that Brent futures trading at $70-$80/bbl would not significantly hinder the current global economic expansion," the rating agency said. 

 

However, if the conflict persists longer than a few weeks, crude oil prices could rise further. Crude oil prices above $100 per barrel would create mounting energy security and economic strain, Moody's said. If such a situation arises, energy imports into India would become costlier, weakening the rupee against the dollar and pushing inflation higher in India.

The ongoing conflict in West Asia is pushing India to look for other countries to fulfil its energy demand. India has been pressurised to stop buying natural gas from Russia with the US imposing an import duty penalty on India for the same. On Friday, the US issued a 30-day breather to India by allowing it to purchase Russian oil on a temporary basis. 

 

"To enable oil to keep flowing into the global market, the treasury department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil," US Treasury Secretary Scott Bessent said. "This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorises transactions involving oil already stranded at sea... This stop-gap measure will alleviate pressure caused by Iran's attempt to take global energy hostage," he said.  End

 

US$1 = INR 91.67

 

Reported by Shweta

Edited by Tanima Banerjee

 

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