Fuel Crisis May Push Petrol Prices Higher: RBI Governor

Sanjay Malhotra warned that the government may increase petrol and diesel prices if the ongoing Middle East crisis continues for a long time. While addressing a conference in Switzerland, the RBI Governor said the conflict and the blockade of the Strait of Hormuz have disturbed global oil and gas supplies, leading to a steady rise in international energy prices.

Fuel Concerns prices rise As Middle East Conflict Disrupts Oil Supply

Malhotra explained that India depends heavily on imported crude oil, gas, and fertilisers, making the country vulnerable to global supply disruptions. He said the current crisis has already started impacting India’s economy and could create additional pressure on inflation and import costs in the coming months.

Despite rising global crude prices since the conflict began on February 28, the government has so far avoided increasing retail petrol and diesel rates in order to protect consumers from sudden inflation. However, the RBI Governor indicated that if the situation remains unresolved, the government may eventually pass on part of the higher fuel costs to the public.

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He also praised the Centre for maintaining fiscal discipline and continuing its fiscal consolidation efforts during a difficult global economic situation. Meanwhile, Prime Minister Narendra Modi has appealed to citizens to reduce fuel consumption and avoid unnecessary use of imported products such as edible oil to help conserve foreign exchange reserves.

The crisis has also affected the Indian currency market, with the rupee witnessing a sharp depreciation and trading below the 95 mark against the US dollar. Economists believe prolonged geopolitical tensions in the Middle East could further increase pressure on India’s economy due to higher import bills and rising transportation costs.

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