Context:
The latest escalation in tensions between Israel and Iran has sparked fears of oil supply disruptions and rising inflation in India. Though India does not import significant oil volumes directly from Iran, analysts warn of ripple effects across global markets.
Key Economic Risks for India
Crude Oil Import Cost Surge
- India imports over 80% of its crude oil requirements.
- Global oil prices surged 8% in a day following the Israeli attack on Iran.
Strategic Supply Route at Risk
- 20% of global oil supply passes through the Strait of Hormuz.
- Located between Iran and the Arabian Peninsula, any blockade or tension here could impact oil shipments from key Indian suppliers like Iraq, Saudi Arabia, and the UAE.
Implications for Indian Exports
Route Disruptions
- Conflict in the Middle East could block access to the Suez Canal and Red Sea.
- Indian exporters may be forced to reroute via the Cape of Good Hope, adding:
- 15–20 days transit time
- $500–1,000 per container
