A possible increase in fuel prices owing to the US sanctions on Iranian crude exports can have an adverse impact on the current account deficit (CAD), the rupee and inflation, warns a report.
India meets a tenth of its crude demand from Iran, making it the third largest customer for the Persian country. The “immediate challenge” is to find alternative suppliers who will be able to deliver oil at competitive prices
that Tehran offers after May 2, Care Ratings said in its report on Tuesday.
Pressure on CAD
According to the rating agency’s report, higher crude prices will put pressure on the trade deficit and CAD. An increase in crude oil prices by 10 percent could translate into the CAD increasing by 0.4-0.5 percent of GDP.
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