Iran's missile strike on Israel sparks oil price surge, Raises economic concerns for India
A recent ballistic missile strike by Iran on Israel has heightened fears of a broader Middle Eastern conflict, driving crude oil prices up by 4% overnight due to concerns over potential supply disruptions. As oil prices continue to rise, experts are cautioning that India, heavily dependent on energy imports, could face significant economic challenges.
The missile strike followed Israeli military action in Lebanon, including the targeted killing of Hezbollah leader Hassan Nasrallah, escalating fears of wider regional instability. With OPEC+ controlling approximately 40% of the global crude oil supply, the organization's decisions could significantly influence oil prices, potentially impacting emerging economies like India.
Sugandha Sachdeva, Founder of SSWealth Street, explained that for every $10 increase in oil prices, India's inflation typically rises by 0.3%, while the current account deficit (CAD) widens by $12.5 billion, or around 43 basis points (bps) of GDP. "Higher fuel costs lead to increased transportation and production expenses, which ultimately raise the prices of goods and services, squeezing consumer purchasing power," Sachdeva noted.
Jigar Trivedi, Senior Research Analyst at Reliance Securities, echoed these concerns, warning that rising oil prices would result in larger dollar outflows from India, further weakening the rupee. Iran, a key member of OPEC, exports around 1.7 million barrels of oil per day. Its strategic location near the Strait of Hormuz — a vital passage for oil exports from Gulf countries like Saudi Arabia, Qatar, and the UAE — further elevates the risk of global energy supply disruptions as regional tensions escalate.
India is already showing signs of economic strain. The country's manufacturing Purchasing Managers' Index (PMI) fell to an eight-month low in September, while the CAD in Q1 2024 rose slightly to 1.1% of GDP, compared to 1% a year ago, according to Sachdeva. This underscores India's vulnerability to external shocks, such as rising oil prices.
A widening CAD leads to greater outflows of foreign exchange, further devaluing the rupee and making imports more expensive. Although fuel and light account for only 6.84% of India's Consumer Price Index (CPI), sustained oil price increases could push inflation higher, which in August stood just below 4%.
Data from the Petroleum Planning & Analysis Cell (PPAC) revealed that India’s oil import dependency increased to 87.8% in FY24, up from 87.4% in FY23 and 83.8% six years ago. This growing reliance on imported crude makes India highly susceptible to global oil price fluctuations, affecting inflation, the trade deficit, foreign exchange reserves, and the rupee’s value.
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Mangaluru Dasara Mahotsava inaugurated at Gokarnanath Temple
Mangaluru: The grand annual ‘Mangaluru Dasara Mahotsava’ was inaugurated at Shri Gokarnanath Temple in Kudroli on Thursday by former Union Minister B. Janardhan Poojary. The event marks the beginning of the vibrant Dasara celebrations in the city.
As part of the traditional rituals, devotees carried the specially adorned idol of Goddess Sharada in a ceremonial procession around the temple premises before installing it in the main hall for worship. In addition to the Sharada, the idols of Mahaganapathi and the nine forms of Durga were also installed for special prayers and offerings during the festival, which will continue until October 13.
The inaugural ceremony featured a performance by the renowned tiger dancers, a highlight of the Kudroli festivities. The temple was decorated for the occasion, and lighting arrangements, along with other festive decorations, have been set up across the city by devotees to celebrate Mangaluru Dasara.
The celebrations will culminate on the evening of Sunday, October 13, with a grand procession of the idols through the streets of Mangaluru, marking the conclusion of the Mahotsava.
