New Delhi, April 5 -- The monetary policy committee (MPC) in its first meeting for the new fiscal year faces what the International Energy Agency has described as the largest supply disruption in the history of the global oil market.

The closure of the Strait of Hormuz and disruption to 20% of global energy supply have pushed spot crude oil prices well past $100 per barrel. Futures markets indicate that prices will remain in the $100-120 per barrel range until July and remain elevated beyond that.

A key risk to both inflation and growth has thus materialized and is likely to persist for a quarter at least. Rupee depreciation is adding to these imported inflationary pressures, as the oil price spike has worsened the external flow positio...