The impact of the ongoing war in Iran and the geopolitical tension arising from it is now clearly visible on the global energy market. The sharp rise in crude oil prices has increased the concern of big energy importing countries like India. India imports about 88 percent of its total oil needs, so even a small increase in prices in the international market has a direct impact on the country’s economy and the pockets of the common people.
Sharp rise in crude oil prices
According to the PPAC report, the average price of crude oil purchased by India has seen a big increase in the last few months. Talking in figures, in January 2026, India had purchased crude oil at an average price of $ 63.08 per barrel. In February it increased to $69.01 per barrel. While the average price reached $ 108.23 per barrel in the first 16 days of March 2026, i.e. till March 16, 2026, the situation became more serious when on March 16, 2026, India bought crude oil at a price of $ 142.69 per barrel.
If we look at the increase in the price of crude oil only in the month of March, the price was $85.24 on March 4, $99.12 on March 6, $120.28 on March 10, $127.22 on March 12 and reached $142.69 per barrel on March 16, 2026.
During the 18-day war with Iran, India is buying crude oil at almost double the price compared to February 2026. Whereas the prices of petrol and diesel are likely to increase in the near future.
Huge pressure on India’s import bill
According to the report, the biggest impact of the increase in crude oil prices is on India’s import bill. If the price of crude oil increases by $ 10 per barrel, India’s import bill may increase by about Rs 15,000 crore annually.
If the price increases from $69 to $142 per barrel, the country’s import bill may increase by about Rs 1.05 lakh crore annually. That means India may have to spend an additional Rs 288 crore every day. In fact, on March 16, 2026, India had to pay about Rs 288 crore more than what it was spending in February 2026.
Petrol price in other countries of the world
According to the report of Global Petrol Prices, if we compare the figures of 23 February and 11 March, the price of petrol has increased in at least 85 countries of the world.
Immediately after the start of the Iran war on March 7, 2026, the price of domestic LPG cylinder across India increased by Rs 60, while the price of a commercial 19 kg cylinder increased by about Rs 115.
What will be the impact on India’s economy?
If the average price of crude oil remains around $ 140 per barrel, then in the entire financial year 2026-27,
- Inflation- around 5.6%
- GDP growth – around 5.8%
- Current Account Deficit (CAD) – will be around (minus) 3%.
But now the price of crude oil has reached close to $ 200 per barrel, the impact of which will be very serious for India, because India imports 88% of its oil needs. In such,
- Inflation may go above 7-8%.
- Current Account Deficit- Import bill may exceed $ 300 billion (about Rs 27.6 lakh crore)
- GDP growth- India’s economic growth may fall by 1–2 percentage points. If the estimated growth rate was 6.5%, it may come down to 4.5–5%.
Every $10 increase in the price of crude oil increases inflation, slows GDP growth, and increases India’s current account deficit.
Three important aspects of Indian economy
- If inflation increases, it will have a direct impact on the purchasing power of the common man. That means the common man will purchase less goods and services from the market. If inflation increases by 4 to 5 percent, then the goods which the common man used to buy earlier for Rs 10,000, may now cost Rs 10,100 to 10,500.
- If GDP decreases, it will reduce job opportunities, the pace of salary increase of people will slow down, the risk of job loss will increase, government expenditure will reduce and business activities will weaken.
- Effect of increasing current account deficit – Rupee may weaken against the dollar. Petrol, gas and imported goods will become expensive. Inflation will increase, foreign exchange reserves will be under pressure and economic stability may be at risk.
Other important aspects
- Indian stock market decline
After the start of the Iran war, more than 400 stocks have registered a double-digit decline. Additionally, investors’ wealth declined by about Rs 33 lakh crore.
- LNG (Liquefied Natural Gas)
Iran war has affected India’s LPG market. Also now there is increasing concern regarding the supply of Piped Natural Gas (PNG). CNG is the second largest auto fuel in India after petrol. India will import about 24-25 million tonnes of LNG in 2025. 50-55% of India’s LNG imports come through the Strait of Hormuz. India does not have strategic reserves of LNG. If problems continue in Hormuz, gas prices will increase and industrial demand may decrease.
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