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Informist, Thursday, Mar. 5, 2026

 

NEW DELHI – The rising tensions in West Asia are beginning to threaten supply chains that support large parts of the Indian economy and can rapidly evolve into a broader supply shock, according to Global Trade Research Initiative Founder Ajay Srivastava. "If disruptions to shipping through the Strait of Hormuz continue beyond a week, the effects could quickly spread from energy markets to fertiliser supplies, manufacturing inputs, construction materials, and export industries such as diamonds," Srivastava said in a report. 

 

India currently faces fresh geopolitical risks after Israel and the US launched joint military strikes on Iran Saturday, prompting retaliation from Tehran. Iran's Supreme Leader, Ayatollah Ali Hosseini Khamenei, and several of the country's top military leaders were killed in the first wave of attacks by Israel and the US. Iran has since retaliated against Israel and has also targeted US military installations around the Persian Gulf.

 

Iran has also shut the Strait of Hormuz, a narrow waterway that connects the Persian Gulf to the Indian Ocean, resulting in a sharp jump in prices of crude oil and natural gas. A fifth of the global crude oil supply flows through the Strait of Hormuz. About half of India's crude oil imports – primarily from Iraq, Saudi Arabia, the United Arab Emirates, and Kuwait – also pass through the strait, making the country particularly vulnerable to shipping bottlenecks there and to surging freight and insurance rates.

 

According to Srivastava, the developments are increasing fears of a broader global energy supply shock, with the most immediate vulnerability for India being petroleum. "India has about 30 days of stocks, any prolonged disruption in shipments could quickly push up fuel prices, raising transport and logistics costs and feeding into inflation," he said. "Farmers would also feel the pressure through higher diesel prices for irrigation pumps and tractors," he added. At 1845 IST, the May Brent Crude futures contract on the Intercontinental Exchange was $83.63 per barrel, sharply higher than the closing level of $72.48 per barrel on Friday. 

 

Natural gas supplies also face similar risks, Srivastava said. In 2025, India imported $9.2 billion worth of liquefied natural gas from West Asia, accounting for 68.4% of its LNG imports. The "vulnerability is already visible" with Petronet LNG Ltd. stopping LNG supplies to GAIL (India) Ltd. from Thursday owing to restrictions on vessel movement. As a result, GAIL is assessing the need to cut gas supply to downstream customers.

 

India also imported large volumes of liquefied petroleum gas from West Asia in 2025, representing 46.9% of its LPG imports. LPG remains the primary cooking fuel for millions of households and with stocks covering roughly two weeks of consumption, any disruption could quickly affect cooking fuel availability, Srivastava said. Other petroleum-related imports would also be affected, such as refined fuels and petroleum coke. "Supply shortages would raise production costs in these sectors and could slow construction and infrastructure projects," the trade expert said. 

 

The effects of military conflict in West Asia could also reach India's farm sector through a shortage in fertiliser supplies. "Supply disruptions during the crop season could reduce fertiliser availability, increase government subsidy costs and push up food prices," Srivastava said. In 2025, India imported $3.7 billion worth of fertilisers from West Asia, which included $2.2 billion of mixed fertilisers, accounting for 31.1% of imports, and $1.5 billion of nitrogen fertilisers, representing 30.3% of imports. 

 

Other imports that could be affected include various industrial raw materials, like polyethylene, construction materials like limestone, critical minerals, and metals, including direct reduced iron and copper wire, and diamonds. "What begins as a regional conflict could rapidly evolve into a broader supply shock for the Indian economy," according to Srivastava. End

 

US$1 = INR 91.60

 

Reported by Priyasmita Dutta

Edited by Saji George Titus

 

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