New Delhi: Rising geopolitical tensions linked to the Iran conflict could significantly increase India’s oil import bill and bring the rupee under pressure, former NITI Aayog CEO Amitabh Kant said on Thursday.
In a post on X, Amitabh Kant, who currently serves as a senior adviser to global financial institutions including Fairfax Financial Holdings and Sumitomo Mitsui Banking Corporation, said that every $10 per barrel rise in global crude oil prices could add $13-14 billion to India’s annual import bill, widen the current account deficit, and weaken the rupee.
“Every $10 per barrel rise in crude prices can add $13–14B to India’s annual import bill, widen the current account deficit and pressure the rupee. Geopolitical shocks will keep testing our energy security,” he said.
Amitabh Kant emphasised that India’s next phase of energy transition must focus not just on expanding renewable capacity but also on ensuring reliable delivery of clean power.
“India’s next step isn’t just adding clean capacity, but it’s delivering reliable clean power at home: high-PLF solar-wind hybrids, electric vehicle momentum, modern grids, large-scale batteries and pumped hydro storage, and firm low-carbon baseload like nuclear. We need it all,” he said.
The former IAS officer, who had served as India’s G20 Sherpa and the chief executive officer of NITI Aayog, the government’s apex public policy think tank, further said that the country must prioritise execution and reliability in its energy transition.
He emphasised the importance of energy independence as being vital for economic resilience.
India imports more than 85 per cent of its crude oil requirements, making the economy highly sensitive to global price fluctuations, particularly during geopolitical disruptions in major oil-producing regions.
Of this, around 50 per cent is supplied by Middle Eastern countries through the Strait of Hormuz, the flows from which have been disrupted following the Iran war.
However, the country has also diversified its oil sources by increasing imports from Africa, Russia, and the US and building resilience through strategic reserves.
Currently, India is in a reasonably comfortable position as far as crude oil, LPG and LNG are concerned, with a stock of 25 days of reserve for crude and 25 days of products, including the quantity that is in transit on ships headed for the country’s ports, according to government sources.
The country’s oil marketing companies (Indian Oil, Bharat Petroleum and Hindustan Petroleum) have supplies for several weeks and continue to receive energy supplies from several routes.
In addition, the government has directed the oil marketing companies not to export petroleum products so that the buffer stock is further enhanced.
India also has oil storage capacity at Pudur of 2.25 million metric tonnes (MMT), the Visakhaptnam facility has the capacity to store 1.33 MMT of crude oil, while Mangalore has a storage capacity of 1.5 MMT.
The country can fall back on these strategic oil reserves in times of emergency. These reserves can also be dipped into at times when global prices skyrocket to provide a cushion to the national oil companies.
(IANS)
