Reserve Bank of India Governor Sanjay Malhotra has warned that petrol and diesel prices in India could increase if the ongoing Middle East crisis continues for a longer period, raising concerns over inflation and pressure on household expenses.
Speaking at a conference in Switzerland, the RBI governor said the government may eventually have to pass on rising global energy costs to consumers if disruptions in oil and gas supplies persist due to the escalating conflict in the Middle East.
The warning comes as tensions in the region and the blockade of the Strait of Hormuz continue to disrupt global energy markets. The Strait of Hormuz is considered one of the world’s most critical oil shipping routes, and any prolonged instability there directly impacts crude oil prices worldwide.
India, which imports a major share of its crude oil and fertilisers, is already beginning to feel the impact of the disruptions, Malhotra said. He noted that the government has so far avoided increasing retail fuel prices despite rising international costs since the conflict began on February 28.
“The government has been fiscally prudent and focused on fiscal consolidation,” the RBI governor said, while adding that if the crisis continues, it may only be “a matter of time” before higher fuel prices are passed on to consumers.
The statement has sparked fresh concerns over inflation, transport costs and the broader impact on the Indian economy. Rising fuel prices often lead to increased prices of essential goods, food items and logistics services, affecting both businesses and households.
Prime Minister Narendra Modi has already urged citizens to reduce fuel usage and cut unnecessary consumption of imported products such as edible oils to help conserve foreign exchange reserves during the crisis period.
The economic pressure is also visible in the currency market. The Indian rupee has weakened sharply and is currently trading below the 95 mark against the US dollar, reflecting concerns over rising import bills and global uncertainty.
Experts believe prolonged geopolitical tensions in West Asia could further strain India’s economy by increasing energy costs and widening the trade deficit. However, analysts also point out that the government may continue to delay retail fuel price hikes for as long as possible to control inflation and protect consumer sentiment.
The Middle East conflict has already triggered volatility in global crude oil markets, with countries heavily dependent on imported energy closely monitoring developments in the region.
With fuel prices remaining a politically and economically sensitive issue in India, any future hike in petrol and diesel rates is expected to have a major impact on daily life and overall market sentiment.
