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MUMBAI, March 11 (Reuters Breakingviews) - India’s hunger for energy imports remains its Achilles heel. Pair that with a war roiling the petro-states of the Gulf, home to some 10 million ​Indian expatriates who account for 38% of the country’s inward remittances, and it’s easy to see why the ‌U.S.-Israel war against Iran has put the world’s fifth-largest economy on edge.

Opposition politicians jeered Subrahmanyam Jaishankar, India’s foreign minister, on Monday during his speech in parliament on the conflict after crude shot up to $119 a barrel and the Indian rupee hit a fresh low of 92.35 against the U.S. dollar. ​It was already the worst-performing major Asian currency in 2025.

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There will be limited relief from Washington’s green light for Indian ​companies including Reliance Industries (RELI.NS), opens new tab to buy otherwise-sanctioned Russian oil. Juicy discounts on that supply narrowed long ⁠ago, and now there will be more competition from other buyers.

And in a situation of very limited supply, India’s stockpile can ​only meet its needs for 25 days, per a Reuters report citing refining sources. India’s demand for liquefied natural gas is a ​problem too. It imports 80% of its needs from the Middle East. New Delhi on Tuesday curbed supply to industries, a day after extending waiting periods for cooking gas.

India has multiple levers it can pull to shield consumers from any price shock. New Delhi can ask state-backed fuel retailers like ​Bharat Petroleum (BPCL.NS), opens new tab and Indian Oil (IOC.NS), opens new tab to absorb the increased cost. At a pinch, the government could cut excise duties, albeit at ​the cost of a wider budget gap. Inflation in India is also low: retail prices grew 2.75% year-on-year in January.

Protecting the rupee, however, is ‌harder. Bigger ⁠fiscal deficits in national accounts will hurt. India’s central bank intervened on Monday to stem the currency’s slide. Though the price of oil receded to $92 per barrel after U.S. President Donald Trump claimed the war would be over “very soon”, it remains volatile. If it held at $100 per barrel for three months, India’s current account deficit could rise to 2% of GDP from the baseline assumption of ​1.6%, according to Gaura Sengupta, ​an economist at IDFC First ⁠Bank. That would be close to the 2.3% level clocked in 2008-09, soon after the global financial crisis.

India’s currency is already suffering from weak net foreign direct investment and capital outflows, in part ​because of worries about the threat new artificial intelligence tools pose to India’s services exports. ​A prolonged war ⁠in the Middle East will really grease the rupee’s problems.

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Context News

• India does not expect inflation to rise substantially from a jump in global crude oil prices triggered by the war in the Middle East, as domestic price levels remain near the lower ⁠end of ​the central bank’s tolerance band, Finance Minister Nirmala Sitharaman said on March 9.
• The ​Indian rupee fell to an all-time low of 92.3475 against the U.S. dollar on the same day, as surging crude prices sparked concerns over growth and inflation ​in the world’s fifth-largest economy.

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Editing by Una Galani; Production by Aditya Srivastav

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Shritama Bose

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Shritama Bose, India columnist, joined Breakingviews in November 2022. She covers the financial sector and related topics from Mumbai. She was earlier a reporter at Financial Express, a top business daily newspaper, tracking the Reserve Bank of India, lenders and fintech companies. She has a bachelor’s degree in English Literature and a postgraduate diploma in journalism.

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