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Informist, Monday, Jun. 16, 2025

--Trade secy: Too early to comment on impact of Iran-Israel war 

--Trade secy on Iran-Israel conflict:To discuss shipping cos' issues this wk 

--Trade secy on Iran-Israel conflict: Watchful of situation 

--Trade secy: Talking to exporters on concerns from Iran-Israel conflict 

NEW DELHI – Commerce Secretary Sunil Barthwal said Monday that while it is too early to comment on the impact of the conflict unfolding between Israel and Iran, the government remains "watchful of the situation". Barthwal said the government is in touch with exporters to understand their concerns emanating from the conflict. He spoke after detailing the trade data for May.

Israel struck several Iranian military and scientific targets, including nuclear facilities, early Friday as part of "Operation Rising Lion" to stop the country developing nuclear weapons. Iranian media reported multiple explosions in the country, including at its biggest nuclear enrichment facility in Natanz. Israel has since declared an emergency in anticipation of retaliation by Iran.

Following Friday's attack, crude oil prices surged over 13% to $78.50 per barrel, their highest level since Jan. 27, on worries of a potential disruption in supply. Several analysts now fear a wider conflict will emerge in west Asia and lead to uncertainty at a time when the war between Russia and Ukraine appears to be cooling off and the dispute on US tariffs seems to be getting resolved.

"As the Israel–Iran conflict intensifies, India is increasingly at a risk of collateral economic fallout, with energy security, trade routes, and key commercial interests facing growing uncertainty," think tank Global Trade Research Initiative said Sunday.

Besides the price outlook, escalation of the conflict poses a huge logistics-related supply risk as Iran is reportedly considering closing the Strait of Hormuz, the point of entry into the Persian Gulf. The strait divides Iran from Oman and the United Arab Emirates and links the Persian Gulf to the Gulf of Oman and the Arabian Sea.

This narrow waterway, Global Trade Research Initiative Founder Ajay Srivastava said, is "indispensable to India", which depends on imports for over 80% of its energy needs. "Any closure or military disruption in the Strait of Hormuz would sharply increase oil prices, shipping costs, and insurance premiums--triggering inflation, pressuring the rupee, and complicating India's fiscal management," he said in a note. 

Besides the Strait of Hormuz, Israel's strike on the Houthi military leadership in Yemen has heightened tensions in the Red Sea region, which also poses serious risks to India. Nearly 30% of India's west-bound exports to Europe, North Africa, and the US East Coast travel through the Bab el-Mandeb Strait, now vulnerable to further disruption, according to Srivastava. The Bab el-Mandeb Strait connects the Red Sea with the Gulf of Aden and the Indian Ocean. With the building of the Suez Canal, the strait assumed great strategic and economic importance, forming a portion of the link between the Mediterranean Sea and Asia.

"If shipping must be rerouted around the Cape of Good Hope, transit times could rise by up to two weeks, and costs could soar," Srivastava said. "This would directly impact Indian exports of engineering goods, textiles, and chemicals, while also raising input costs for key imports." Against the backdrop of these apprehensions, Barthwal said the commerce ministry will meet shipping companies this week to understand their issues.  End

US$1 = INR 86.06

Reported by Krity Ambey and Priyasmita Dutta

Edited by Rajeev Pai

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