World economy in serious trouble, India vulnerable: Raghuram Rajan on oil crisis
India Today
The former RBI Govenor said a 15–20% global energy disruption would require sharp demand cuts, pushing oil to $150–$200 per barrel, risking severe economic stress if the conflict continues another month.
Former RBI Governor Raghuram Rajan has issued a stark warning on the global economic fallout of the ongoing US-Israeli war against Iran, cautioning that a prolonged conflict could trigger an unprecedented oil shock, destabilise financial systems, and leave oil-dependent economies like India particularly exposed. As the war enters its third week, Rajan underlined that the trajectory of the global economy now hinges critically on how long the conflict persists.
Speaking to India Today’s Rajdeep Sardesai, Rajan said, “I think the important question is how long it lasts”, warning that even a short conflict has already caused disrupted energy for about 20% of the total production of energy sources across the world.
While some countries have temporarily cushioned the blow using reserves, he stressed that “the longer this goes on the more impact it will have.”
Rajan flagged a worst-case scenario where supply disruptions force a sharp correction in demand.
“If you're trying to adjust to the fact that 15 to 20% of world energy sources are shut in, you have to have tremendous demand destruction,” he said, adding that “oil prices will be in the $150, $200 a barrel range.”
Such levels, he noted, are largely uncharted territory and could trigger widespread economic stress. “The world economy is in serious trouble” if the war extends for another month, he cautioned.
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