Exporters body FIEO on Wednesday said the unabated turmoil in Iraq may lead to a spike in oil prices by $15 to $20 a barrel in the next couple of months, adding to inflation woes and jacking up India's oil import bill.
India imports about 25 million tonnes of oil from Iraq each year. Militants pressing a major offensive in Iraq attacked Iraq's biggest oil refinery today, pushing up Brent for August settlement to about $113.60 a barrel on the London-based ICE Futures Europe exchange.
"If war-like situation in Iraq continues then it may push the oil price up by $15-20 per barrel in next couple of months. The crude prices have already touched $113 per barrel which may add to an additional $4-5 billion on oil imports besides pushing inflation," Federation of Indian Exports Organisations (FIEO) president M Rafeeque Ahmed said.
India's bilateral trade with Iraq stood at $19.4 billion with imports contributing to $18.5 billion while exports were $0.9 billion in 2013-14. India's exports to the West Asian nation consists mainly cereals, machinery, iron & steel, pharma, meat products and ceramics.
The government announced host of measures yesterday to tame inflation, which soared to a five-month high of 6.01 per cent in May.
The exports (to Iraq) have already suffered a decline of 28 per cent in 2013-14 as compared to 2012-13 primarily on account of drop in export of iron & steel, sugar and petroleum products, FIEO said.
Iraq is the second-biggest oil exporter in the 12-nation Organization of Petroleum Exporting Countries (OPEC) bloc after Saudi Arabia.