West Asia Conflict Threatens Indian Inflation and Money Markets
A potential conflict in West Asia could intensify inflationary pressures in India and weigh on domestic money-market conditions due to elevated crude oil prices and a weakening rupee, according to Emkay Wealth Management. In its latest Navigator report on Brent crude, the company warned that a combination of higher crude prices and currency weakness could magnify the domestic impact.
Dr Joseph Thomas, Head of Research at Emkay Wealth Management, stated that 'For India, the risk is not limited to higher crude prices.' The report highlighted the risks associated with disruption to global oil supply chains, particularly through key routes such as the Strait of Hormuz, where roughly 20 per cent of global oil flows pass through.
Emkay expects crude prices to remain sensitive in the near term to the intensity and duration of the conflict, developments around ceasefire negotiations, and the speed at which normal supply channels are restored. However, the company sees a different trend emerging over the medium to long term, with global oil supply expected to grow faster than demand, putting downward pressure on crude prices once geopolitical risks ease.