Brent Crude Tops $108: Four-Month High Raises Inflation and Growth Risks for India’s Economy

Brent crude crossed $108 a barrel on Friday, reaching its highest level in four months as escalating tensions in West Asia intensified concerns about energy supplies and the economic cost for oil-importing countries such as India.

The international oil benchmark touched $108.77 a barrel before easing to $107.75 at the time of reporting. Prices have risen more than 12% over the past week amid renewed fears about disruptions to key energy corridors.

The surge follows an escalation in direct hostilities involving the United States and Iran. According to the ANI report, the conflict has disrupted global energy corridors and prompted regional military mobilisations, adding pressure to oil markets.

The rally also reverses the retreat seen after May, when crude last traded around similar levels. Prices subsequently fell below $80 a barrel as geopolitical tensions eased and hopes of peace improved. Renewed fighting has pushed the benchmark back above $100, bringing India’s exposure to expensive energy into sharper focus.

For India, the concern extends from the cost of importing crude to its effects across the economy. Higher oil prices can increase businesses’ input and transportation costs, feed inflation and enlarge the import bill. A sustained rise could also put pressure on the current account and economic growth.

Economist Sunil Sinha, former senior economist at the National Council of Applied Economic Research, told ANI that these pressures could affect India in the coming quarter.

“With Brent crude oil prices rising above USD 100 a barrel again amid renewed geopolitical tensions, India's economic growth could face pressure in the coming quarter, as higher oil prices raise inflation, import costs and risks to the current account,” he said.

Sinha estimated that a $10 increase in international crude prices could shave approximately 20–30 basis points, or 0.2–0.3 percentage points, off India’s GDP growth.

“If oil prices go up by USD 10, then the impact of that increase on GDP would be around, say, 20 basis points to 30 basis points,” he said.

Citing India’s latest quarterly GDP growth of 7.8%, Sinha warned that more expensive crude could weaken that momentum. His estimate describes the potential effect of an oil-price increase; it is not a revised growth forecast.

The duration of the price surge will be critical. With Brent gaining more than 12% in a week, India’s economic outlook will depend partly on how long crude remains elevated and whether the West Asia conflict causes further disruption to energy supplies.

With inputs from ANI