The Iran-Israel conflict took another risky turn on Tuesday night when Iran launched its biggest missile attack yet on Israel. Here's how this escalating tension could impact India's oil security
Iran-Israel tensions took a worrying tone earlier this week after Iran launched its largest-ever missile attack on Israel, majorly targeting military bases. While most of the missiles were intercepted by Israel's air defenses, the attack marked a dangerous escalation in the ongoing conflict.
The strikes came after Israel's attack on Lebanon. Just last week, thousands of pagers and radios belonging to Hezbollah members exploded across Lebanon, killing and injuring civilians as well. Shortly after, Israel assassinated Hezbollah leader Hassan Nasrallah.
“Iran made a big mistake tonight - and it will pay for it,” Israeli Prime Minister Benjamin Netanyahu said in a statement after Iran's missile attack.
If the West Asia conflict escalates further it can have serious socio-economic implications. One of the greatest threats resulting from such an attack would be on the prices of oil.
On Wednesday, oil prices surged by over 3 per cent, fueled by growing fears that the growing tensions in West Asia could disrupt the region's crude production. Brent futures hit a one-month high, jumping by over 3.3 per cent, to $75.98 per barrel. Before this, the prices had been hovering around $71 per barrel.
India is one of the largest importers of oil and any fluctuations in oil prices can create significant supply chain issues for the country. Experts have already warned that the rising oil prices are a major concern for the country.
For every $10 increase in oil prices, India's inflation rate surges by nearly 0.3 per cent. Meanwhile, the current account deficit also takes a worrying tone and expands by $12.5 billion or roughly 43 basis points of GDP, as per estimates cited by multiple reports.
It is worth noting that just a few weeks ago, many were surprised by the declining oil prices as the commodity plummeted below $70 per barrel.
However, the ongoing war has not only led to a reversal in the price trend of oil but also highlighted India's continued energy dependence on the Middle East.
Despite a sharp rise in oil imports from Russia, India still relies heavily on oil from the Middle East. According to data, the share of Russian oil in India's imports dropped to nearly 36 per cent (roughly) in August, down from 42 per cent in July. In contrast, the share of Middle Eastern oil in India's crude imports surged to 44.6 per cent in August, up from 40.3 per cent the previous month.