The ongoing Middle East crisis is expected to keep crude oil prices elevated for an extended period, with benchmark prices averaging USD 96 per barrel in 2026 and remaining around USD 80 per barrel in 2027, according to Asian Development Bank (ADB) Chief Economist Albert Park.
“With a higher oil price expectation, we actually have it as USD 96 per barrel as average for 2026 as per the new reference scenario. It should stay elevated at USD 80 per barrel in 2027. So, our idea is that the oil prices are likely to stay higher for longer,” Park told PTI in an interview.
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He added that futures markets are already reflecting expectations of sustained high prices next year, while current spot prices continue to carry a premium due to supply shortages.
The prolonged West Asia crisis is also expected to weigh on India’s economy, with ADB estimating a 0.6 percentage point hit to GDP growth in FY27, reducing it to 6.3%, while significantly pushing up inflation.
“For India, we do find that growth would be lower by 0.6 per cent (FY27). This is based on our model scenario. But it would not negatively affect growth next year. India would kind of bounce back next,” Park said.
“So that's a bit higher than the inflation impacts for the region (Asia-Pacific), because India is more reliant on imported oil and gas. The growth effect, if you take out China, this negative 0.6 per cent on growth this year is pretty similar to the region as a whole region as well,” Park said.
On inflation, he said the impact would be sharper for India than for the broader Asia-Pacific region because of the country’s dependence on imported oil and gas.
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“Inflation would increase by 2.4 per cent this year to 6.9 per cent,” Park said, adding that the inflationary impact on India is higher than the regional average.
ADB had earlier projected India’s GDP growth at 6.9% for the current fiscal and 7.3% for the next fiscal, with inflation estimated at 4.5%.
In a special update released on April 29, the multilateral lender lowered its 2026 growth forecast for the Asia-Pacific region to 4.7% from 5.1%, citing prolonged disruptions in West Asia.
Park also flagged concerns over El Niño-related weather disruptions and rising fertiliser costs, warning that both could affect food production and inflation.
“Whenever there's a bad harvest in India, we have an issue with higher prices,” he said, noting that India plays a major role in global rice trade and any disruption in domestic output often impacts international markets as well.
He added that rising fertiliser prices could force farmers to cut usage, reducing crop yields and tightening food supply later in the year.
“It will definitely have a bearing on food prices, but how much would depend on the gas disruption,” Park said.
