Israel-Iran War: As the unrest in the Middle East, since the US and Israel attacked the country, does not seem to be ending anytime soon, the toll on energy prices continues to grow. The attacks on energy infrastructure have widened the impact on a global level, increasing crude oil and gas prices. As the fear of supply disruption through the Strait of Hormuz and suspension of activities at major refineries has grown, the price of crude oil has surged beyond 110 dollars per barrel.
The price increase registers the biggest jump since 2020, as importers have reacted to the escalating uncertainty around supply and production disruptions.
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The Indian government said that oil imports are continuing, and it has diversified import sources through alternative routes, but experts speculate that the continued conflict and price surge driven by supply uncertainty could affect consumers.
Beginning with increased petrol and diesel rates, the price surge can impact flight costs and every other product and service, rippling across the economy and ultimately affecting household budgets.
Will Oil Prices Surge?
India imports 85 per cent of its crude oil requirement, making it dependent and sensitive to external instability. The prolonged elevated cost of oil can either impact the domestic consumers or pressure the oil marketing companies to absorb the increased rate. Even if fuel prices remain controlled for the short term, the prolonged elevated rates can impact the cost across the broader economy.
The Aviation Sector Most Vulnerable To Oil Price Fluctuation
The aviation sector is one of the most vulnerable sectors to volatile oil prices. Airlines are dealing with higher fuel prices, along with adjusting routes in case of airspace closure. This can eventually impact the flight prices, affecting common people.
Other Sectors That Might Bear Brunt
Experts say that sectors such as paints, tyres and chemicals are particularly exposed to oil price movements. If the cost of crude oil remains elevated, the companies can pass on the additional cost to consumers.