How rising oil prices can impact Indian economy

economictimes.indiatimes.com:

Crude oil prices have shot up since June...
Brent crude has jumped to a 10-month high and breached $93/barrel in mid-September. It has averaged $83.5 in the past year.

• Both Reuters and EIA have raised Brent forecasts.
• Reuters raised the Brent price forecast to $82.45/barrel for 2023 recently, up from its July consensus forecast of $81.95/barrel. The price is expected to average over $85/barrel in the fourth quarter.
• EIA's short-term energy outlook (STEO) report expects the Brent crude oil price to average $93/barrel in the fourth quarter of 2023, up from its August forecast of $86/barrel.

… even as inflation remained high
Consumer inflation has softened but remains above RBI’s tolerance limit.

• Rising crude prices, if transmitted to retail fuel prices, will lead to higher inflation.
• The impact will be minimal as retail fuel prices are unlikely to increase in the pre-election year.
• Consumer inflation is already above the RBI¡¦s upper tolerance limit. OMCs and government are expected to absorb the impact of higher oil prices.
• RBI¡¦s survey of professional forecasters expects the CPI Combined to average 5.5% and 5.4% in the second and third quarters of 2023-24. In the first quarter of 2023-24, consumer inflation averaged 4.6%.
• The jump in consumer inflation has been mainly due to the rise in food prices.

Dollar could rise further
Rising oil prices dragged the rupee to a 10-month low recently.

• Rise in oil prices leads to rupee depreciation as higher import bill increases demand for USD.
• Higher demand pushes up the value of USD against the rupee. Rupee has weakened from Rs.79.58 to Rs.83.06 in the past year.
• It averaged Rs.82.96 in September 2023, compared to the past oneyear average of Rs.82.23.
• Other factors like a strong