Article
Geopolitical Shockwaves: Assessing the Economic, Energy Security, and Strategic Implications of the West Asia Crisis on India
The West Asia region containing more than 9 million members of the Indian diaspora as well as nearly half of the proven global crude reserves, forms a strategic focal point of the Indian economic and security structure. The resurgence of war after the October 7, 2023 Hamas-Israel war, coupled with Houthi maritime disruptions in the Red Sea, has produced multi-dimensional geopolitical shocks which have direct impacts on India. In this study, the transmission of oil prices has raised the inflation rate at CPI of 6.7% in 202223, increased current account deficit to 2.0% of GDP and further devalued the rupee to the 8485/USD range. The strategic petroleum reserves in India only have an import duration of 9-12 days against the IEA mark of 90 days which translates into a devastating weakness. At the same time that strategic autonomy has been put to test by conflicting demands between GCC states, Israel and Iran, India has demonstrated some resilience through diversification of suppliers, buying Russian crude oil at a discount, and an accelerated deployment of renewable energy. The paper ends with policy suggestions that are integrated in energy security, diplomatic realignment and crisis management.