The ongoing Israel-Palestine conflict poses a significant challenge to the Reserve Bank of India’s (RBI) forecasts regarding crude oil prices at $85 a barrel and the exchange rate of 82.5 against the US dollar, which have a direct impact on inflation numbers.  

A day after Israel hit back, the crude oil prices jumped to $88.76 a barrel. The traders are setting their eyes on $90 level, which will then open the move to $95 a barrel, which it touched last week. The rupee is currently trading stable at 83.28 against the US dollar, but it is higher than the RBI’s projections. 

“Though, the conflict doesn’t pose any immediate threat to oil flows, there’s a risk of confrontation between US and Iran as it is anticipated that it was an attack backed by Iran,” says Ravindra Rao, VP-Head Commodity Research, Kotak Securities Ltd.