Rising tensions in the Middle East could have a serious impact on India’s economy, according to credit rating agency ICRA. As the Iran–Israel conflict escalates, experts warn that a key shipping route for India’s oil and gas may face disruption, potentially driving fuel prices sharply higher.
Strait of Hormuz, a narrow sea passage, is known as one of the busiest in the world for India’s oil transport. Nearly half of India’s crude oil and most of its natural gas imports come through this route, mainly from Gulf countries such as Iraq, Saudi Arabia, Kuwait, and the UAE.
ICRA has warned that if trouble (the Iran–Israel conflict) in the region continues and oil supplies are delayed or cut, India’s fuel import bill could rise by up to $14 billion. This would also increase the country’s current account deficit, affecting the overall health of the economy.
Following recent clashes, oil prices have already risen sharply, moving from about $65 to $75 per barrel. If rates remain high, it may hurt Indian businesses, reduce profits, and lead to delays in new private investments.
While oil producers could gain from higher prices, companies that refine oil and distribute gas may face losses due to rising costs and shrinking margins. LPG suppliers may also struggle to manage price gaps.
Most of the oil that passes through this region is used in Asian countries, including India, China, Japan, and South Korea. Alternative transport routes are limited, meaning any long-term conflict could further strain global supply.
Although India’s growth forecast remains steady for now, ICRA warns that continuing instability could change that outlook.