Crisis in West Asia as Iran conflict disrupts oil supply through Strait of Hormuz, threatening India’s energy security, trade, currency stability and economic growth.
Dr. Mohammad Farooque | Qalam Times News Network
Kolkata | March 12, 2026
Rising tensions and crisis in the Middle East expose India’s dependence on imported fuel and the risks of global geopolitical instability.
Crisis is rapidly unfolding across global energy markets as escalating hostilities involving Iran, the United States and Israel begin to reshape the economic outlook of many countries, particularly those heavily dependent on imported fuel. As tensions spread across West Asia, widely known as the Middle East, the ripple effects are being felt far beyond the battlefield. For India, a nation that relies heavily on imported oil and gas, the developing situation could turn into a severe economic challenge if the conflict continues for an extended period.
West Asia supplies nearly half of the world’s energy resources, making stability in the region critical for the global economy. With military tensions rising, oil production has slowed or halted in several locations, while transportation routes have become uncertain. Tankers carrying crude oil are reportedly stranded in the Persian Gulf as the strategic Strait of Hormuz faces disruptions. Since a significant share of global fuel shipments pass through this narrow waterway, even partial closure has created anxiety in international markets and pushed crude prices sharply upward.
The Crisis becomes particularly alarming for India because the country imports nearly 86 percent of the oil it consumes. About half of that supply normally travels through the Strait of Hormuz from West Asian producers. Since the beginning of March, reports indicate that fuel shipments reaching India have declined noticeably. Along with crude oil, India also depends on the region for large quantities of natural gas and cooking gas, supplies that now appear uncertain as the conflict intensifies.
The consequences are already visible in global energy prices. Crude oil has climbed to around 94 dollars per barrel and analysts warn that it could soon cross the 100-dollar mark if the conflict persists. For India, this means that alternative sources of fuel would have to be purchased at significantly higher prices. Current reserves of oil and gas within the country may last only a few weeks if supplies remain disrupted. As a result, the price of cooking gas has already increased and fuel costs such as petrol and diesel could rise further. Higher fuel prices inevitably lead to increased transportation costs, which in turn push up the price of everyday goods and services.
Beyond the energy sector, the conflict threatens to disrupt India’s broader economic activity. Nearly one-quarter of India’s exports are directed to West Asian markets, and ongoing instability could slow or halt that trade. Fertiliser production may also be affected because its raw materials are closely linked to petrochemical products, which depend on steady oil supplies. Any shortage in fertiliser could create additional pressure on India’s agricultural sector.
Trade logistics have also become complicated. Reports suggest that tens of thousands of cargo containers carrying Indian imports and exports remain stranded in the Persian Gulf due to disruptions in maritime routes. No one can predict how long these shipments will remain delayed, leaving exporters and businesses facing uncertainty.
Another major concern involves the millions of Indians living and working in West Asian countries. Their remittances form an important part of India’s foreign exchange earnings. If instability affects employment opportunities or income levels in those countries, the financial flow back to India could decline significantly.
Financial markets have already begun reacting nervously to the situation. The Indian stock market has shown signs of volatility as investors grow cautious about the global outlook. Foreign investors appear to be withdrawing funds, increasing demand for the US dollar and weakening the Indian rupee. The exchange rate has already crossed the 92-rupee mark against the dollar, raising concerns about inflation, foreign exchange reserves and economic growth.
The broader geopolitical dimension cannot be ignored. Wars and strategic rivalries among major powers often produce consequences that extend far beyond their immediate objectives. For countries like India, the challenge lies in safeguarding national economic interests while navigating a complex global political environment.
At this critical moment, policymakers must prepare for multiple economic scenarios—ranging from prolonged fuel shortages to rising inflation and trade disruptions. Strategic reserves, diversified energy partnerships and diplomatic engagement will all play an essential role in managing the risks.
Ultimately, the unfolding events in West Asia highlight a fundamental lesson: global conflicts rarely remain confined to one region. Their economic aftershocks travel quickly across borders, affecting markets, industries and everyday lives far from the original battleground.
