The fallout of the crisis in West Asia on India’s economy

While the Russia-Ukraine war shows no sign of abatement, another major crisis in West Asia has hit the global economy. This war has disrupted production, storage, and transport of various energy products including crude oil, natural gas and fertilisers, and has led to supply disruptions and increase in sectoral prices. There is a serious, although partial, blockade of the Strait of Hormuz thereby restricting the passage of crude oil, gas and other petroleum products as well as other goods. Even if matters get resolved in the near future, it may take considerable time for the normalisation of the supply chain. However, even the temporary ceasefire that has been agreed to has brought down the Brent crude oil price from $109.3 per barrel as on April 7 and 8, to about $95.

India has been diversifying its sources of imported crude oil, gas and fertilisers. At present, India is importing crude oil from 41 source countries. In fact, India’s dependence on imported crude has been increasing in recent years and it is presently close to 90%.