(DJ)
India sees a greater probability of global crude oil prices remaining high for a longer period, a scenario that threatens to dent growth and fan inflation in Asia’s third-largest economy. The government will have to watch crude prices before preparing any policy response, a finance ministry official told reporters in New Delhi, asking not to be identified, citing rules. Oil supplies from Iran are also likely to be constrained after the US reinstated financial sanctions on the Islamic Republic, the official said.
Brent crude rose as much as 3.1% on Wednesday to $77.20 per barrel, its highest level since November 2014. India’s central bank estimates oil at $78 a barrel would shave off 10 basis points from its 7.4% forecast for gross domestic product growth in the year to March 2019. Moreover, it expects costly crude could stoke inflation by 30 basis points.
