India’s domestic economy faces sharply slower growth and higher inflation as the West Asia conflict transmits energy-market volatility into national accounts, with Brent crude peaking near $120 per barrel before easing to $109.03. The International Energy Agency chief said the current geoeconomic crisis exceeds the combined shocks of 1973, 1979 and 2022.

Growth is forecast to slow to 6.5% in FY27 from 7.4% in FY26, while inflation is projected to rise from 2.3% to 4.4% on disruptions to energy supply chains. The price and availability squeeze on crude has curtailed India’s import bill buffer and pressured household and industrial fuel costs.

Officials said real-time monitoring of freight, refining throughput and retail pricing remains in effect to calibrate responses to market swings. The finance ministry and energy agencies will review contingency stocks and sourcing routes this week.