Oil Prices Might Hit $120 Per Barrel, Expert Warns of High Inflation and Costly Fuel

The ongoing conflict in West Asia is creating serious concerns for the global economy. Crude oil prices have already crossed the USD 90 mark on March 7, 2026, and experts are now warning that rates could climb as high as USD 120 per barrel. Manoranjan Sharma, Chief Economist at Infomerics Ratings, stated that if this geopolitical crisis drags on, it will significantly disrupt economic calculations for import-dependent nations like India.

Why are oil prices rising so fast?

Oil prices have surged from below USD 70 to approximately USD 90 per barrel in a very short time. This sudden jump happened after tensions escalated between the United States, Israel, and Iran. Reports suggest that military actions and aggressive statements, including US President Donald Trump seeking Iran’s surrender, have spooked the markets.

The fear is centered around the Strait of Hormuz, a critical path for global oil supply. Any blockage here disrupts the flow of oil to the world. We are already seeing the impact in the neighborhood, as Pakistan announced a sharp hike of PKR 55 per litre in petrol and diesel prices just yesterday due to these international market surges.

How will this impact the common man in India?

India imports a large portion of its fuel, and the national budget was planned assuming oil prices would stay near or below USD 70. With prices now hovering around USD 90 and potentially going to USD 120, the cost of living could go up. Experts calculate that for every USD 10 rise in oil prices, inflation in India could increase by 0.2 to 0.4 percentage points.

This situation creates a risk of retail fuel price hikes, which would directly increase transport and logistics costs. Industries like automobiles, paints, and chemicals may also face higher input costs. The Indian Finance Ministry has already warned that the conflict could have deeper effects on the economy and exchange rates than previously thought.

Key Economic Impacts: