Project Brief
View on GitHubProblem Statement
How does an oil price shock from the Iran-Israel conflict transmit into Indian household costs — fuel, food, and currency?
Tools & Stack
Methods
Price transmission modelling, household expenditure analysis, sector-level cost simulation, import dependency mapping
Output
Interactive shock simulator showing fuel, food, and transport cost impacts across income groups
Built an interactive React-based shock simulator; modeled fuel, LPG, and food price pass-through from first principles; structured public macroeconomic data from PPAC, RBI, EIA, and MOSPI; and translated the findings into a household-level decision tool. The calculator lets users input their own commute distance, vehicle type, gold holdings, and travel budget to estimate personal monthly exposure to the oil and currency shock.
Data updated to May 20, 2026. ₹96.96/$ = intraday low; ₹96.82/$ = May 20 closing rate (Federal Reserve H.10 / RBI DBIE) — used in all household calculations. Brent crude near $110/barrel (peak was $114). Actual pump prices: Delhi petrol ₹98.64/L, Delhi diesel ₹91.58/L, Mumbai petrol ₹107.59/L, Hyderabad petrol ₹111.84/L (government-administered; below free-market cost). India crude import dependency: ~90%. Conflict timeline: US-Israel operations began February 2026; Hormuz closure March 4, 2026; April–May 2026 = escalation phase. Household impact estimates are scenario-based with simplified pass-through assumptions.
What Actually Happened
Three months. Six events. A measurable economic transmission from conflict to household budgets.
US & Israel launch military operations against Iran's nuclear programme
Iran declares Strait of Hormuz 'closed' — attacks ships attempting to transit
Brent crude surges from $72.48 → $112.57 — a 55.3% spike in under 4 weeks
India cuts excise duty on petrol & diesel by ₹10/L to absorb the shock
Brent near $110–115. OMC losses hit ₹1 lakh crore. Rupee at ₹96.82 as of May 20 — all-time closing low.
PM Modi from Hyderabad: WFH, use public transport, skip gold, pause foreign travel
55% spike in 4 weeks following Hormuz closure — Brent peaked at $114, currently ~$87.13
Why India Hurts More Than Most
When the Persian Gulf choke point tightens, India feels it faster than almost any country on earth.
That's 22% of India's total import bill — spent entirely in US dollars. Every dollar oil costs more means India sells more rupees to buy dollars. The rupee weakens. Which makes oil even costlier in rupee terms. It's a self-reinforcing spiral — and India is uniquely exposed to it.
₹85.5 → ₹96.82: How Your Money Lost 13% in 14 Months
The rupee didn't just weaken — it set record lows week after week. Here's exactly why.
Rupee closed at ₹96.82/$ on May 20, 2026 — down 13.2% in 14 months. Intraday low hit ₹96.96. New record low set almost every week.
The 5 forces pulling the rupee down simultaneously
Bar widths indicate relative contribution weight. Source: Swastika Research, Univest 2026
5 Sectors. Real Numbers. Your Life.
Click each sector to see the exact mechanism, live data, and what it means for an average Indian household.
OMCs losing ₹1,700 Cr/day to keep your petrol at ₹94
Business Standard, BusinessToday — May 2026 →IOC, BPCL and HPCL are absorbing estimated under-recoveries to prevent a pump price shock. Current administered prices (May 20, 2026): Delhi petrol ₹98.64/L, Delhi diesel ₹91.58/L, Mumbai petrol ₹107.59/L, Hyderabad petrol ₹111.84/L. At Brent ~$110 and ₹96.82/$, the free-market cost of petrol would be substantially higher. Cumulative OMC under-recoveries have crossed ₹1 lakh crore over 10 weeks. The government cut excise duty by ₹10/L on March 27 to partially offset this. A further price revision is widely anticipated once the supply outlook stabilises.
Two Hidden Crises the Headlines Missed
Beyond petrol and LPG — the Hormuz disruption is reducing airline capacity and putting pressure on India's Kharif fertilizer supply chain.
Aviation Turbine Fuel (ATF) doubled to ₹2,07,341/kl on April 1, 2026 — a 114.5% surge. ATF now makes up 55–60% of airline operating costs, up from 30–40% before the crisis. The Federation of Indian Airlines has warned the sector is "on the verge of collapse."
Air India suspended its Delhi–Chicago route. IndiGo is operating at reduced frequency on Gulf routes. Airlines are caught in a double squeeze: Brent near $110 drives ATF costs, and the weak rupee (₹96.82/$ closing on May 20) inflates every dollar-denominated cost.
Outlook Business: Airlines crisis deep-dive →India sources roughly 35% of its fertilizers from the Gulf and applies over 120 kg of nitrogen per hectare. The Hormuz blockade has stranded urea and potash shipments at sea. Indian fertilizer manufacturers have already cut urea output as LNG input costs surge — threatening the critical Kharif sowing season (June–July 2026).
Higher urea costs and delayed imports mean India's monsoon crop could be undersupplied with inputs — pushing vegetable and grain prices higher through Q3 2026. The FAO Chief Economist has flagged India as facing "rising food inflation risks" heading into the harvest cycle.
CNBC: Fertilizer crisis & food inflation →4 Things PM Modi Asked Every Indian to Do — and Why They Actually Work
On May 10–11, 2026, Modi made an unusual direct public appeal from Hyderabad. Use the sliders below to see the exact rupee impact on your household AND the national aggregate if millions of families act together.
How Much Is the Iran Shock Adding to Your Monthly Bills?
Adjust for your actual usage. Includes 2-wheeler + car fuel, LPG, and food inflation impact.
Fuel assumes ₹14/L under-recovery pass-through from expected price hike. LPG assumes ₹300/cylinder hike (current loss: ₹674/cyl). Food inflation from RBI FY27 projection of 4.6% CPI, applied at 5.5% to food-heavy basket items.
What You Can Actually Do Right Now
Beyond what Modi asked — a practical personal finance playbook built for the Iran shock era.
Use public transport for daily commutes
Metro and bus eliminate petrol spend entirely for those trips. With ATF-driven airfares spiking and petrol hikes imminent, every litre not burned at the pump reduces your cost exposure and eases the OMC subsidy drain that's costing India ₹1,700 Cr a day.
Lock in FD rates before rate cuts
RBI holds at 5.25% but growth pressure may force cuts. Fixed deposits at 6.5–7.5% are available now. Lock in 1–3 year FDs before a rate cut erodes your interest income.
Choose train over flight for domestic travel
Indian airlines slashed 1,034 weekly international flights in May and ATF has doubled to ₹2.07 lakh/kl. For journeys under 800 km, trains are dramatically cheaper, more reliable, and insulated from the aviation fuel crisis entirely. IndiGo and Air India are hiking fares as fast as regulators allow.
Don't pause equity SIPs
Inflation erodes fixed income. Equity — especially domestic consumption stocks — historically outperforms during supply-side inflation. Keep SIPs running. The panic sell is almost always the wrong move.
Delay forex purchases by 2–3 months
Rupee closed at ₹96.82/$ on May 20, 2026 — an all-time low. Buying dollars now locks in the worst rate on record. If ceasefire talks progress and Hormuz partially reopens, the rupee could recover toward ₹88–90. Wait if you can.
Seriously evaluate EV or rooftop solar
This crisis is the strongest possible signal to reduce fossil fuel dependency. India's solar installation costs are at all-time lows. An EV eliminates petrol exposure entirely — the maths have never been more compelling.
SOURCES & DATA REFERENCES
All figures are drawn from published journalism, government releases, and institutional research current as of May 2026. Every number used in this case study has a direct source linked below.