The Reserve Bank of India has warned that petrol and diesel prices in the country could increase if tensions in West Asia continue for a longer period. RBI Governor Sanjay Malhotra said rising global crude oil prices are putting pressure on India’s economy, especially because the country depends heavily on imported energy.

Speaking at an international conference in Switzerland, the RBI Governor indicated that the government may eventually have to pass on higher fuel costs to consumers if the current situation does not improve. He said, “it is just a matter of time before the government will pass on some of the price increases.”

Malhotra said, “If this continues for a longer period of time, then it is a matter of time that the government will actually pass on some of these price increases.”

The warning comes at a time when there are fears about the current crisis in West Asia, which has created an imbalance in the international oil markets, leading to an increase in crude oil prices. According to experts, should the oil prices remain high for a long time, oil marketing companies in India will find it hard to absorb losses without increasing fuel prices.

India is among the major oil-importing nations in the world and depends upon foreign sources for over 85% of its requirements of crude oil. Since the country imports such huge quantities of oil, any rise in prices of oil in the international market will directly impact India’s economy and affect transportation and inflation rates.

In addition, it is worth mentioning that the Governor of RBI has pointed out that the government of India has been fiscally prudent while trying to protect the consumers from shock prices of fuels. In the meantime, the Prime Minister of India, Narendra Modi, has advocated fuel conservation and saving money on import items.

However, the Indian currency rupee has also been affected due to increase in cost of oil imports and foreign investor outflows.The Indian rupee has fallen to all-time low against the US dollar, leading to fears of increased inflation in the upcoming months.

According to economists, if the price of crude oil increases further and if the West Asia conflict continues, India might be forced to increase the price of petrol and diesel in order to make up for losses incurred.