As the US-Israel war on Iran escalates, India is set to be among the countries severely and immediately hit by the resultant oil crisis. About 20–25 per cent of global crude oil and almost 90 per cent of India’s oil imports are transported through the Strait of Hormuz that is likely to be significantly disrupted by the war. According to experts, the list of countries feared to be hit hardest by the Hormuz disruption, includes Japan, China and India.
The strait, between the Persian Gulf and the Gulf of Oman below Iran, is one of the world’s most strategically important maritime oil corridors, linking West Asian oil exports to many markets, a majority of which are in Southeast Asia. The strait lies between the Persian Gulf and the Gulf of Oman, and largely within Iran’s territorial waters.
Experts, while admitting the impact, however point out the fallout may push India to move away from the fossil fuel based energy ecosystem. India presently depends heavily on imported crude oil. It reached a record high of 90 per cent in April 2025. Throughout the financial year 2025 the dependency averaged over 88 per cent because of domestic production stagnating and demand soaring.
Basmati rice, tea export to suffer
Oil prices and shipping insurance costs have already shot up in India by 50 per cent overnight. The export of products such as Basmati rice and tea and clean energy supply chains and broader macroeconomic stability may be affected by the war, experts added.
The war is particularly considered to be a threat to Indian exports: Basmati rice, tea and fruits to West Asia and Africa.
According to sources, about 25 per cent of India’s total Basmati rice exports are to Iran and 20 per cent to Iraq, amounting to over 2 million tonnes of Basmati rice, valued at over US dollar 2 billion. Tea worth approximately Rs 7 billion was exported during 2024-25 to Iran.
“Oil surged 9 per cent on Monday after retaliatory Iranian attacks disrupted shipping in the crucial Strait of Hormuz following the weekend’s bombing by Israel and the United States that killed Iranian Supreme Leader Ali Khamenei,” said a report on the website of Doordarshan, India’s largest public service broadcaster. Prime Minister Narendra Modi has said that “India stands for peace and stability”.
India’s growing reliance on oil
India depends heavily on imported crude oil. It reached a record high of 90 per cent in April 2025. Throughout the financial year 2025 the dependency averaged over 88 per cent because of domestic production stagnating and demand soaring.
The latest war poses a huge threat to this supply, particularly since India was restricted from buying Russian oil under US pressure, it turned more towards the Gulf countries, from which the oil came through the Hormuz route.
India imports crude from more than 40 countries now, though, including the US, West Africa, Russia and Latin America, which may help it to ready a mixed platter of oil adjusted to prices.
Immediate trade impact on India
Experts feel that the immediate Impact on India would be more price-driven and not volume-driven. If the war interrupts Iran’s 3.3 million barrels per day (bpd) of oil production, prices in India could rise by 9-15 per cent, pushing crude from a base of US dollars 70 per barrel to roughly US dollars 76-81.
Countries in West Asia, including Iran, Bahrain, Kuwait, Qatar and United Arab Emirates (UAE) account for bilateral trade worth about US dollars 117.32 billion, with the UAE alone accounting for US dollars 100 billion.
Threat and opportunity to India’s clean energy transition
The war threatens supply chains of renewable energy and e-mobility materials because of disruption in the Strait of Hormuz. Critical mineral supply chains are likely to be affected as well.
Risen oil costs also raise demand for dollars, which puts pressure on the rupee, and likely to lead to domestic inflation
Experts, while admitting the threat, also see the conflict as an opportunity to prioritise sustainable energy security for India and the push towards domestic renewable sources.
“In an increasingly volatile West Asian landscape, the wisdom of accelerating our clean energy ambitions becomes even more critical for energy security. Reducing dependence on imported conventional energy sources, i.e. oil and gas, through rapid deployment of clean technologies is no longer just a climate imperative but a strategic necessity,” said Aarti Khosla, director, Climate Trends.
“The event will undoubtedly create headwinds for India’s economy. India will do well to leverage its relationships to access cheaper oil in this scenario,” said Vaibhav Chaturvedi, senior fellow, Council on Energy, Environment and Water (CEEW).
Vivek Y. Kelkar, a researcher and analyst working on geo-economics and sustainability, however highlights the risk; “For India, the impact would be indirect but significant. With nearly 90 per cent import dependence, every US dollar 10 per barrel rise increases the annual import bill by about US dollars 13–14 billion, widening the current account deficit, pressuring the rupee and adding to inflation.”