NEW DELHI: The government has ruled out an immediate cut in taxes on petrol and diesel to soften the impact of the geo-political tensions, which have triggered a spike in global crude oil prices Brent prices crossed the $71-a-barrel mark early Wednesday morning after Iran launched a missile attack , but softened later in the day. Since last year, Brent prices have jumped nearly 15% and were trading around $68 a barrel.Over the past year, the increase in pump prices of diesel and petrol has been around 10%. "There is no need to panic," said a high-ranking government source, adding that prices had softened a little after a spike due to Qassem Suleimani's killing last week but rose again after Iran fired missiles at American bases in Iraq on Wednesday.Petroleum minister Dharmendra Pradhan told reporters that the government is keeping a close watch on the developing geo-political situation, while also preparing itself to face any eventuality arising out of the crisis. Pradhan has had detailed discussions with external affairs minister S Jaishankar, who has spoken to his counterparts in oil-producing countries stating India's concerns.A sharp rise in oil prices has the potential to adversely impact the Indian economy with inflation facing the first round of impact. An increase of $10 a barrel in crude prices affects inflation by a 0.1 percentage point. With India importing 80% of its crude requirement, the rupee also comes under pressure due to a higher import bill. This, in turn, affects the trade balance and current account deficit.During 2018-19, India's oil import bill was estimated at $140 billion. Both retail and wholesale inflation have shown a rising trend on the back of high food prices and any increase in oil prices could stoke inflation at a time when growth is estimated at an 11-year low of 5%.Besides, a reduction in duties will impact the already strained government finances, especially when net tax revenue has gone up by 2.6% against a budgeted 11% increase (after transfer to states).