Brent crude nearing USD 100/barrel is expected to widen India’s current account deficit and increase inflation to 4.1%. Analysts cite geopolitical risks and supply disruptions, noting India’s high import dependency exacerbates the impact.
As Brent crude neared USD 97 per barrel on Thursday, with an increased likelihood of crossing the USD 100-per-barrel mark as seen in March, India’s current account deficit is expected to widen, while inflation could increase to 4.1 per cent, according to analysts. Brent crude was trading at around USD 95.91 per barrel while crude oil was trading at around USD 88.06 per barrel at the time of reporting.
Geopolitical Risks Pushing Prices Higher
As per market analyst Ajay Bagga, the continued crude oil and gas disruptions with elevated geopolitical risk is overlaying a recovery in the chips and AI trade. He said, “With Brent at USD 96, and with Houthi’s striking Saudi tankers in the Red Sea , oil prices seem headed to USD 100, stressing “Peace hopes have reduced as Marco Rubio said the Iranians are not interested in peace.”
Expert Forecasts and Market Uncertainty
On the other hand, Manoranjan Sharma, Chief Economist, Infomerics Valuation and Rating Limited noted, “Brent crude has already crossed USD 100/barrel in early March 2026 and could remain at or above this level in the near term.” He further highlighted major forecasters, including Goldman Sachs, see prices remaining above USD 100 and up to USD 120 through 2026, if Hormuz disruptions persist, however, as per Sharma, the outlook is uncertain.
Factors Influencing Oil Prices
He further noted, escalation in West Asia and continued OPEC+ supply discipline poses upside risks, while demand destruction, a global slowdown and coordinated strategic petroleum reserve releases could limit the rise.
Impact on Indian Economy
Noting India imports nearly 85-90 per cent of its crude requirement is particularly vulnerable to sustained oil prices above USD 100, he said, “Including freight and war-risk premia, its effective cost could be USD 115/barrel. Accordingly, India’s import bill will increase and current account deficit will widen which will further push the Rupee downwards. “If crude averages USD 100 for a year, GDP growth could fall to 6.6 per cent and inflation rise to 4.1 per cent. Every USD 10/barrel increase could add nearly USD 20 billion–around 0.5 per cent of GDP–to the CAD and shave 15-50 basis points off growth. Higher oil prices would also strain fiscal balances, compress corporate margins and delay an earnings recovery,” he noted. (ANI)
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