Iran Crisis: Rising crude prices increase losses for Indian economy, bond market also comes under pressure:The sharp rise in crude oil prices is expected to have a direct impact on India's economy. India purchases most of its oil needs, and this is expected to significantly increase the cost of crude.

News Topical, Digital Desk : The escalating conflict in the Middle East is now having an impact on the global market, and its impact is becoming more pronounced in India as well. The sudden surge in oil prices has significantly increased pressure on government bonds. In fact, the war-like situation in the Middle East is affecting crude oil supplies. Many oil tankers are unable to pass through the Strait of Hormuz, one of the world's most important oil routes. Consequently, the price of Brent crude oil in the international market rose by nearly 25% in a single day, reaching $115.92 per barrel.

Why is India being affected?

India is the world's third-largest importer of crude oil and buys most of its oil needs from abroad. When oil prices rise in the international market, India's import costs increase. This creates two major economic risks: the risk of rising inflation and pressure on the rupee. Signs of increasing pressure on the Indian economy have led to a surge in selling of Indian government bonds.

The yield on the benchmark 6.48% 2035 government bond rose to 6.7503%, compared to 6.6898% on Friday. This is considered the sharpest single-day gain since early February. The Reserve Bank of India (RBI) is taking steps to prevent further declines in the bond market.
The RBI has decided to purchase ₹500 billion (approximately $5.42 billion) of government bonds under open market operations. Last week, the RBI also purchased ₹99 billion worth of bonds to support the bond market.
According to Gopal Tripathi, treasury head of Jana Small Finance Bank, the combined rise in crude oil prices and the weakening rupee could prove to be a "double blow" for the market. He estimates that if this situation persists, inflation could rise by 0.50% to 0.60%. India's retail inflation rate was 2.75% in January, which is currently considered under control. However, rising oil prices could raise inflation concerns in the future. The ongoing conflict between the US, Israel, and Iran is

Also impacting oil production
Iraq and Kuwait have reduced oil production.
Analysts say the UAE and Saudi Arabia may also be forced to reduce production due to storage capacity being filled. This could further reduce global supply.