India's low stockpiles for energy needs pose economic risk: S&P report

India's low strategic stockpiles to its energy needs poses a risk for its economy amid West Asia conflict, the S&P Global Ratings report said on Wednesday.

The report said the prolonged disruptions to energy supply amid West Asia conflict will hit India's economy, as the country has a high energy import dependency relative to her GDP.

The lifted embargo to purchase Russian crude, however, offers some respite to India, but it likely comes with a higher price tag.

The report further said the energy supply shock will hit most economies in the region, given their net energy importing status. Of which, economies with high energy import dependence relative to GDP face greater vulnerability.

Thailand, South Korea, Vietnam, Singapore, and India have high energy import needs relative to GDP. While China's energy imports are moderate relative to GDP, it is large in absolute terms--making it the region's largest energy importer.

Energy supply gaps are somewhat mitigated as Asia-Pacific economies broadly have some strategic crude oil stockpiles to smooth over any short-term disruption in crude supplies.

Many economies maintain strategic crude oil stockpiles to manage disruption over the short term. Any prolonged supply shortages pose a severe strain to the region's macro-credit conditions, the report added.

Inflationary pressure could escalate, complicating monetary easing paths in the region, while market volatility could upend the current supportive financing conditions., it said, adding that the current accounts will also come under pressure.

The report believes that there is a high degree of unpredictability around the duration and scale of the Middle East war.

"Currently, our base-case scenario remains that military confrontation will be relatively short-live - with the most intense part lasting around two to four weeks—recognizing that broader spill overs and intermittent security incidents could extend beyond this period," it added.