Authorities are closely tracking oil trends, given their impact on inflation and growth, top government sources told NDTV Profit, after Iran parliament approved closure of Strait of Hormuz, an extremely important supply passage of oil.
Being an “extremely sensitive” sector, even limited disruptions significantly increase global crude prices, they said, adding that if the closure continues for over a week, it will jolt the global economy.
India is also exposed to potential fallout, said the above mentioned sources.
"We think the situation will be short-lived and may return to normalcy," they said.
Increasing crude imports from Russia depends on discounts and price trends. The government may consider reviewing excise duty cuts on fuel in case crude oil breaches the $105/barrel level, they added.
The decision to close the Strait came after the US joined the Israel-Iran war by attacking Iran's top nuclear sites earlier on Sunday.
Roughly 20% of the world's crude oil passes through the Strait of Hormuz.
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