Rising conflict between the US and Iran has escalated tensions in West Asia, creating global market instability.
The recent closure of the Hormuz Strait by Iran has alarmed India’s Chamber of Trade and Industry (CTI).
CTI Chairman Brijesh Goyal warned that prolonged closure could create the largest energy crisis in India since 1970.
He noted that crude, petrol, and diesel prices may spike sharply as nearly 20 percent of global oil transits this route.
Goyal explained that Hormuz serves as a crucial energy choke point affecting India, Russia, China, and other major importers.
Consequently, rising fuel costs could hurt transport and manufacturing sectors, while daily essentials may become more expensive.
Inflation and Sectoral Impact
CTI Secretary Ramesh Ahuja and Senior Vice President Deepak Garg outlined current inflation trends in India.
Retail inflation for March-April 2026 stood at 3.4 percent; pan-tobacco rose 4.23 percent; food and beverages increased 3.71 percent.
Clothing and footwear costs went up 2.45 percent, housing, water, electricity, and gas by 1.97 percent, while restaurant services rose 2.88 percent.
If Hormuz remains closed, inflation could exceed five percent, significantly impacting Indian households and businesses.
Four Fronts of Impact on India
1. Energy Supply Shock
India imports 60 percent of crude oil and 40 percent LNG through Hormuz. Disruptions from Iraq, Saudi Arabia, UAE, and Kuwait are likely.
Crude prices could reach $200 per barrel, increasing India’s import bill by $1.5 billion per dollar rise.
Petrol may hit ₹140–150 per liter and diesel ₹130+, while alternate pipelines cover only 20 percent, delaying shipments 15–20 days.
2. Sector-Specific Cost Surges
Aviation: ATF costs could rise 40–50 percent, increasing airfares.
Paint, tires, plastics: raw material prices may surge 25 percent.
Fertilizer: LNG rise could increase urea subsidies and farming costs.
Shipping: freight costs may jump 200–300 percent, affecting exports and imports.
Traders: transport costs could double, impacting logistics efficiency.
3. Strategic and Security Risks
India has a strategic oil reserve of approximately 74 days.
Indian Navy patrols the Arabian Sea, but war escalation could multiply insurance costs tenfold.
Chabahar Port may also experience operational disruptions due to proximity to Hormuz.
4. Contingency Measures
India currently imports 35 percent of oil from Russia, unaffected by Hormuz closure.
Strategic Petroleum Reserve (SPR) in Visakhapatnam, Mangaluru, and Padur totals 5.33 MMT, covering roughly nine days of imports.
Alternate supplies from the US, Guyana, and Brazil could take 40 days, compared to five days via Hormuz, increasing costs.
