Israel’s assault on Iran and heightened tensions within the space pose vital dangers to India when it comes to curtailed provides of oil and a 40-50% increase within the export costs, in accordance to analysts and commerce consultants.
Early on Friday (June 13, 2025), Israel mentioned it had struck “dozens” of nuclear and navy targets in Iran, following which Iran reportedly retaliated with drone strikes of its personal.
Following these developments, world oil costs jumped about 8% in a single day, sparking fears {that a} sustained escalation may push inflation in India up, because it imports about 80% of its oil requirement.
Problems for India
“The ongoing Iran-Israel conflict is likely to pose risks to oil supply even though India does not directly import large volumes of oil from Iran,” Amit Kumar, Partner and Energy & Renewables Industry Leader at Grant Thornton Bharat informed The Hindu. “India imports more than 80% of its crude oil needs. Hence, even if direct imports from Iran are minimal, global price spikes due to conflict will raise crude oil import costs.”
Further, Mr. Kumar mentioned that round 20% of worldwide oil passes via the Strait of Hormuz, which is positioned between Iran to the north and the Arabian Peninsula to the south.
“Any disruption around the Strait of Hormuz may affect oil shipments coming from Iraq, Saudi Arabia, and the UAE who are key suppliers for India,” he added.
Disruptions on this space may additionally considerably damage India’s exports when it comes to time in addition to costs, in accordance to Pankaj Chadha, Chairman of the Engineering Exports Promotion Council of India.
“The escalation of the conflict in the Middle East once again closes access to the Suez Canal and the Red Sea, which will have a huge cost and time escalation for Indian exports by ship,” Mr. Chadda informed The Hindu.
“Going around the Cape of Good Hope will add about 15-20 days per ship and $500-1,000 per container, which effectively works out to a 40-50% increase in costs,” he added.
Impact on costs
While oil costs instantly surged following Israel’s assault, they’re anticipated to settle again down, in accordance to Norbert Rücker, Head of Economics and Next Generation Research at Julius Baer.
“Our best guess is that this latest conflict eruption follows the usual pattern, with prices rising temporarily before returning to previous levels,” Mr. Rücker mentioned. “The oil market is very resilient today and supplies are unlikely at risk. Storage is ample, spare capacity plentiful, and exports grow outside of the Middle East.”
The worth of gold, too, surged to above Rs 1 lakh per 10 grams following the assault as buyers flocked to ‘safe haven’ property.
“In times of conflict and uncertainty, gold remains the go-to hedge for both institutional and retail investors,” Amit Jain, co-founder of Ashika Global Family Office Services mentioned. “What we’re witnessing isn’t just a knee-jerk reaction. It’s a continuation of a broader structural uptrend driven by central bank accumulation, weakening fiat confidence, and long-term inflationary concerns.”
Published – June 13, 2025 10:08 pm IST
