ECONOMY
Iran-Israel war triggers an over 3% spike in oil futures past $75 per barrel
- IBJ Bureau
- Oct 03, 2024
Oil prices on Wednesday surged by over 3 per cent, fuelled by growing fears that the growing tension in West Asia could disrupt the region’s crude oil production. Brent futures hit a one-month high, jumping by over 3.3 per cent to $75.98 per barrel. Before this, the price had been hovering around $71 per barrel.
The world was gripped in fear and uncertainty as Israel had attacked Lebanon, assassinating Iran-backed Hezbollah leader Hassan Nasrallah last week. Following Israel’s attack, Iran retaliated with a barrage of over 200 missiles on Israel, leaving the world hoping that the war would not escalate and engulf the entire oil- and gas-rich region.
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.
India, like the rest of the world is hoping that the war does not intensify. India is the second- largest importer of oil, and any fluctuation 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, according to 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 had 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 West Asia.
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