Oil Price Surge Could Cost India $14 Billion More: Amitabh Kant Warns

Yugcharan News | March 5, 2026

Rising geopolitical tensions in the Middle East have once again triggered concerns over global oil supply and energy security. Former Amitabh Kant, who earlier served as India’s G20 Sherpa and the Chief Executive Officer of NITI Aayog, has warned that the ongoing spike in crude oil prices could significantly increase India’s import bill and put pressure on the country’s economic stability.

In a recent statement shared on social media, Kant highlighted the financial impact that rising oil prices could have on India. According to him, every $10 increase in crude oil prices could add nearly $13–14 billion to India’s annual oil import expenditure. This surge, he said, would directly affect the country’s current account balance and could weaken the value of the Indian rupee against global currencies.

The warning comes at a time when global oil markets are witnessing renewed volatility due to escalating tensions involving the Iran, the United States, and strategic shipping routes in the Gulf region. Oil traders and economists worldwide are closely watching developments in the Strait of Hormuz, which plays a crucial role in global energy supply chains.

Oil Prices Climb in Global Markets

The uncertainty surrounding oil supply has already begun to influence global markets. The benchmark Brent crude oil recently climbed more than three percent to around $83.99 per barrel, while West Texas Intermediate crude oil rose to nearly $77.42 per barrel.

These benchmarks are widely used to determine oil prices across international markets. When their prices increase sharply, countries that rely heavily on oil imports—such as India—often face immediate financial consequences.

India imports nearly 85 percent of its crude oil requirements, making the economy particularly sensitive to fluctuations in international energy prices. As the world’s third-largest oil consumer, the country’s energy bill already runs into hundreds of billions of dollars each year.

According to analysts, even a modest increase in oil prices can ripple across the entire economy, affecting transportation costs, electricity generation, industrial production, and consumer goods.

Strategic Importance of the Strait of Hormuz

One of the biggest concerns raised by experts is the security of the Strait of Hormuz, a narrow maritime passage connecting the Persian Gulf to the Gulf of Oman.

The strait is considered one of the most important oil transit routes in the world. Nearly 20 percent of global oil shipments pass through this corridor every day. For India, the route is even more critical because almost half of the country’s crude oil and liquefied petroleum gas (LPG) imports travel through this passage.

Recent reports of military tensions and possible threats to oil tankers operating in the region have heightened fears of supply disruptions. Even the perception of instability can cause oil prices to surge, as traders anticipate potential shortages or logistical complications.

If the situation escalates further and tanker movements are restricted, the impact on global energy markets could be severe.

Potential Impact on India’s Economy

Economists believe that a sustained rise in oil prices could have several consequences for India’s economic outlook.

First, it would increase the country’s import bill, leading to a larger current account deficit. The current account deficit refers to the difference between the value of goods and services a country imports and those it exports.

When oil prices rise sharply, India has to spend more foreign currency to buy the same amount of fuel. This increases the demand for dollars and often results in pressure on the Indian rupee.

A weaker rupee can make imports even more expensive, creating a cycle that may contribute to inflation. Higher fuel prices often lead to increased transportation costs, which eventually push up the prices of everyday goods such as food, consumer products, and construction materials.

Second, rising oil prices could complicate the government’s fiscal management. If fuel prices climb significantly, authorities may face pressure to reduce taxes or provide subsidies to protect consumers from steep price increases.

Such measures, while beneficial for households in the short term, could strain government finances.

Domestic Fuel Market Reaction

The rising global prices have already begun to reflect in India’s domestic commodity markets. On the Multi Commodity Exchange of India, crude oil futures for April delivery recently increased by ₹185 to reach around ₹7,055 per barrel.

Commodity analysts say that domestic futures often react quickly to global developments, as traders attempt to hedge against volatility in international energy markets.

However, retail fuel prices in India are influenced by multiple factors, including taxes, transportation costs, and exchange rates. As a result, the full impact of global price increases may take time to appear at petrol pumps.

Government Preparedness and Strategic Reserves

Officials have indicated that India currently maintains strategic petroleum reserves and commercial oil stocks that could help manage supply disruptions for a limited period.

According to government estimates, the country has sufficient reserves to meet demand for approximately six to eight weeks in case of a major supply disruption.

These reserves are stored in underground facilities at key locations and are designed to provide a buffer during global energy crises.

In addition to strategic reserves, India has been actively working to diversify its oil supply sources. Over the past decade, the country has increased imports from nations such as the Russia, the United States, and several producers in West Africa and Latin America.

Diversification reduces the risk of overdependence on any single region and helps maintain supply stability during geopolitical tensions.

Long-Term Solution: Energy Independence

Despite short-term measures, Amitabh Kant emphasized that India’s long-term energy security depends on reducing dependence on imported fossil fuels.

He urged policymakers to accelerate the transition toward clean and domestic energy sources. According to Kant, simply adding renewable energy capacity is not enough. The country must focus on building a reliable and resilient clean energy system.