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The escalating US-Iran tensions affected the Indian economy as the fuel prices hiked again

By Gagandeep Sokhey . 7th January 2020 10:00am
The escalating US-Iran tensions affected the Indian economy as the fuel prices hiked again

There was the latest hike in the prices of petrol and diesel due to the ongoing US-Iran tensions and the global oil prices hitting $70 mark.

According to the reports, as on January 6, 2020, the prices of petrol and diesel in India were hiked by 15 paise/litre and 17 paise/litre respectively. Based on this new price, the petrol rates increased to Rs. 75.69 for a litre in the national capital, whereas the Diesel rate climbed to Rs. 68.68. 

The global oil prices have surged to hit the mark of $70 and gold prices are also hit making it costlier as compared to the last six years data. The crude oil prices were at a high level in September 2019 when the drones attacked Saudi Arabian oil production facilities as it affected a global output of 5%.

This all happened after the tensions between US-Iran rose as the Iranian commander Qassem Soleimani was killed in an US airstrike. Not only the fuel prices increased, the stock markets also saw a major setback from Japan to Hong Kong including India as well. 

This change has come at a worse time in India as its economy is struggling at less than 5% GDP growth and inflation is rising over and over again because of the hike in prices of onions. Now, this thing came as an external shocker which can make matters worse.

As India's domestic oil and natural gas production have been slowing down gradually in recent years, it has made the country to depend more on imports. India is almost 84% dependent on imports to meet its oil requirements and any spike in global pricing will affect directly on the economy.

The Monday's hike in fuel prices is the fourth day of the prices going up since January 2, 2020. In a total, the petrol price has gone up by 53 paise for a litre whereas the diesel rates hiked by 72 paise.

This leads to the queries of the day:

# What do you think India should do to make itself less dependent on fuel imports?
# Don't you think the Indian nation is rich with natural resources, why not optimize the production inhouse?