Amid the ongoing tensions between Israel and Iran; India’s GDP might get hit because of the rising crude oil prices. If the heightened tension in West Asia pushes average crude prices by USD 10 per barrel, it will typically push up India's net oil imports by nearly USD 13-14 billion during the year.

The sudden rise in crude prices will enlarge India's CAD by 0.3 per cent of GDP, noted a recent report by ICRA. If the average crude oil price rises to USD 80-90/bbl in FY2026, then the CAD is likely to widen to 1.5-1.6% of GDP from our current estimate of 1.2-1.3% of GDP, ICRA stated, as reported by ANI.

The ICRA also said “This would also exert pressure on the USD/INR pair during the fiscal. The report says the conflict between Iran and Israel, which began on June 13, 2025, pushed crude prices from USD 64-65/bbl to USD 74-75/bbl.