Editor’s Note
This article discusses the escalating tensions in the Middle East following recent US airstrikes, including the potential for Iran to close the Strait of Hormuz. Such a move could trigger a significant spike in global oil prices, prompting nations like India to explore alternative energy supplies. The situation remains fluid and carries profound implications for global markets and geopolitics.
The crisis in the Middle East has deepened following US airstrikes on Iran. There are indications that Iran may close the Strait of Hormuz. In such a scenario, there are fears of a massive surge in oil prices. India is also keeping an eye on supply alternatives.
Tensions across the world have increased after the US intervened in the ongoing conflict between Iran and Israel on Sunday. US President Donald Trump announced late Saturday night that the US had bombed three of Iran’s nuclear sites (Fordow, Natanz, and Isfahan). Following this move, there are concerns of a major spike in global crude oil prices. Experts believe that if Iran retaliates, oil prices could reach $120 per barrel.
This US action is directly escalating the Middle East crisis.
After the attack, there is unease among investors that Iran could block the Strait of Hormuz. This route handles 25% of the world’s crude oil supply. JP Morgan estimates that oil prices could jump directly from $78 to $120 per barrel.
India’s Petroleum Minister Hardeep Singh Puri said that India has already diversified its supply routes. Out of India’s total consumption, about 1.5–2 million barrels come via the Hormuz route, and the rest from other countries. However, he acknowledged that the real impact will be seen when the markets open on June 23.
This war could have a direct impact on India’s economy. Not only trade with Iran and Israel, but disruptions could occur in trade with the entire West Asia region.
If Iran closes this route, it will affect 60% of India’s gas and 50% of its oil imports. This route is only 21 miles wide but is responsible for 20% of the world’s oil trade. A $10 per barrel increase could raise India’s inflation rate by 0.35%.
India has an annual trade of ₹3.6 lakh crore with West Asia (e.g., Iraq, Jordan, Yemen, etc.). This accounts for 34% of India’s total exports. 30–35% of Basmati rice from Haryana goes to Iran, which is currently halted because insurance is not available during the war.
If oil becomes expensive, transportation costs will increase, making vegetables, fruits, milk, and daily necessities more expensive. Electronics (imported from Israel) and fertilizers (from Iran) will become costlier, and prices of agricultural products and items like mobile phones could also rise. Gold prices could reach ₹1 lakh per 10 grams.
Affected export routes will increase costs. Pressure on inflation and financial planning. Delays in container movement and maritime transport are possible.
According to GTRI (Global Trade Research Initiative), the war will also affect trade with countries like Iraq, Jordan, Lebanon, Syria, and Yemen. India’s exports to these countries amount to $8.6 billion, and imports are $33.1 billion.
Brent crude fell 2.33% to close at $75.48 on June 21, while WTI fell 0.28% to close at $74.93. Bloomberg’s analysis indicates that prices could move into the $80-$90 range, and $100+ is also possible if Iran closes the Strait of Hormuz.
If tensions deepen between Iran and Israel and the US remains actively involved, India could face significant impacts on oil, trade, inflation, and daily life. Experts believe that if this war leads to the fall of the Iranian government or the removal of Supreme Leader Ali Khamenei from power, its impact could be even greater than the 2011 Libyan revolution. This could severely disrupt supply.