New Delhi [India], March 7 (ANI): Global crude oil prices could climb to around USD 120 per barrel if the conflict in West Asia continues for a prolonged period, said Manoranjan Sharma, Chief Economist at Infomerics Ratings, warning that an extended geopolitical crisis could significantly disrupt global economic calculations.

Speaking to ANI, Sharma said oil prices have already surged sharply within a short period. 'Before the conflict, crude oil prices were below USD 70 per barrel, but they have already risen to around USD 90,' he noted.

According to him, if tensions involving the United States, Israel and Iran continue to escalate and the conflict lasts longer than expected, oil prices could rise even further.

He explained that earlier expectations were that the conflict might ease within a few weeks, but the situation now appears increasingly uncertain. 'If oil prices climb to USD 100 or even USD 120, several economic projections will have to be revised significantly,' he said.

Sharma pointed out that India's budget assumptions and Reserve Bank calculations were based on oil prices being around USD 70 or lower, meaning a sustained spike would force policymakers to revisit their estimates.

Despite the potential shock from rising crude prices, he said India's economy is largely driven by domestic demand, which may help cushion the broader impact on GDP growth. However, he warned that higher oil prices would likely worsen the country's three key deficits -- trade deficit, current account deficit and fiscal deficit.

Historically, Sharma noted, increases in crude oil prices have had a clear impact on inflation. 'A USD 10 rise in crude oil prices can add about 0.2 to 0.4 percentage points to CPI inflation...,' he asserted.

If tensions continue, potential risks include capital outflows from emerging markets, volatility in financial markets and disruptions in supply chains, all of which could invariably affect countries like India.

Recalling past trends, Sharma said crude prices had once surged to around USD 145-147 per barrel more than a decade ago during a period of geopolitical uncertainty. While he expressed hope that such a situation does not recur, he stressed that the possibility of oil reaching USD 120 per barrel cannot be ruled out if the conflict intensifies or drags on. (ANI)