Middle East War

The Middle East war has made the near-term outlook of the Indian economy hazy, raising concerns that the US-Iran conflict will derail the economy's growth momentum, drive inflation higher, and dent corporate profitability, leading to softer stock market returns. Crude oil prices have stayed over the $100 per barrel for over two months now, fuelling concerns over their negative impact on India's current account deficit, inflation, and GDP growth. The anticipated US-Iran peace talks remain stalled despite diplomatic efforts from both sides. Only a final resolution to the conflict can ensure a smooth supply of crude oil and LPG through the Strait of Hormuz and bring prices down significantly. As long as energy prices remain high, market sentiment will remain fragile. The longer the delay in resolving the Middle East conflict, the greater the damage the Indian economy will suffer.