India's reliance on imported energy exposes it to geopolitical supply shocks. In this context, what is the most likely short-term impact of a major disruption in crude oil imports?
Higher input costs and inflation pressure
India imports a large share of its crude oil requirement, so a major geopolitical disruption to crude oil supply typically causes global oil prices to spike sharply. This directly raises input and transportation costs across sectors, feeding into higher overall inflationary pressure in the short term, rather than strengthening the rupee or boosting exports.
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