Prime minister Narendra Modi will hold a review meeting with finance minister Nirmala Sitharaman and officials from the Ministry of Finance on the impact of the Russian invasion of Ukraine on domestic economy.
Government sources confirmed that the meeting will take place today evening. As the Russian federation officially announced the invasion of Ukraine earlier today, the Brent crude breached the $100 per barrel mark, which is the highest level after September 2014.
It may be noted that Sitharaman said during one of the post budget interactions in Mumbai earlier this week that the emerging geo-political situation in Ukraine and spiralling crude oil prices pose headwinds to the domestic financial stability.
The benchmark equity indices also tanked today due to the ongoing situation.
The oil situation meanwhile does not augur well for India. ICICI Securities said in a report some time back that oil prices may remain elevated -- well above $90/bbl -- for several months, if the U.S. imposes additional sanctions on Russia (including its ability to export oil and gas) following a possible Russian invasion of Ukraine.
"Russia accounts for 11% of global crude-oil exports. If sanctions take about 60% of this off global markets (with China, Belarus and a few other customers possibly defying the sanctions), world crude-oil supply would decline by 3 million barrels per day, and the Brent crude price would likely shoot above $110/bbl," the report said.
Now that the invasion has begun and the US has said that further stringent sanctions will be taken up in addition to the measures already announced, high global oil prices would translate into higher energy import cost for India along with high prices in the domestic markets which will further stoke inflation. FM said in Mumbai earlier this week that the government is "watchful" of the global oil situation.
