The conflict in West Asia, particularly the disruption in the Strait of Hormuz, has led to crude oil prices exceeding $100 per barrel, creating significant economic challenges for India. According to a report by Union Bank of India, this situation is contributing to inflationary pressures, with the Indian rupee trading near record lows around 95 against the US dollar. The report highlights that India, which imports approximately 85% of its crude oil, is particularly vulnerable to these price hikes, which are described as an 'energy tax' on the economy. The Reserve Bank of India (RBI) has responded by maintaining the policy repo rate at 5.25% and implementing measures to stabilize the currency and financial markets. Despite a narrowing merchandise trade deficit of $20.7 billion in March 2026, the report warns that prolonged disruptions could keep oil prices in the $100-110 range, exacerbating inflation and widening the current account deficit. The future outlook for India's economy will largely depend on the evolution of the West Asia conflict and its impact on global oil prices.