India's Oil Dependence and Subsidies Increase Vulnerability to Middle East Conflict

India's heavy reliance on oil imports from the Gulf and limited strategic reserves make it vulnerable to rising energy prices and potential supply disruptions amid Middle East tensions. Moody's warns that sustained spikes in global energy prices could result in significant economic damage, with GDP losses across Asia-Pacific peaking at around 3%. India and China are expected to face sizeable headwinds due to their dependence on imported energy. Domestic demand in India is weak, but inflation remains relatively subdued. However, Moody's cautions that benign inflation could reverse if commodity prices continue to rise.