The US and Israel carried out coordinated airstrikes across Iran on Saturday, February 28, sharply escalating tensions in the region. The attacks targeted Iran’s leadership, military command centres, missile systems and nuclear-linked sites, and killed
Ayatollah Ali Khamenei - Iran’s Supreme Leader. In retaliation, Iran has been pounding American airbases and assets in neighbouring countries.
As tensions rise in West Asia, concerns are growing in New Delhi. India has deep economic and people-to-people ties with Iran and key Gulf countries such as the
United Arab Emirates (UAE), Saudi Arabia, Qatar, Kuwait and Bahrain. These links span oil supplies, trade, investments, remittances, and millions of Indian workers and students living there.
Oil supplies at risk?
India imports nearly 90 per cent of its crude oil needs, making it highly sensitive to disruptions in West Asia.
Over the past year, India has changed its oil sourcing strategy. While Russia remains an important supplier, its share in India’s crude basket has fluctuated. In February, India’s crude imports touched 5.22 million barrels per day (bpd), the second-highest ever. Russia’s share was about 20 per cent, while West Asia’s rose to 51 per cent.
Until early 2025, Indian refiners sourced about 37 per cent of crude from Russia and around 45 per cent from West Asia. By March 2025, Russia’s share stood at 36 per cent during record imports, while Gulf nations accounted for 38 per cent.
However, in the first three weeks of January 2026, Russian supplies fell to about 1.1 million bpd, lower than December’s average and far below mid-2025 levels of over 2 million bpd. This happened amid pressure by the Donald Trump-led US administration on New Delhi to redirect its energy purchases from Russia.
As Russian flows reduced, traditional West Asian suppliers stepped up. Iraq’s supplies rose to almost match Russia’s volumes. Saudi Arabia’s exports to India increased to 924,000 bpd in January 2026, up from 710,000 bpd in December and a low of 539,000 bpd in April 2025.
Now, fresh risks are emerging around the Strait of Hormuz -- a narrow waterway between Iran and Oman. Following the US-Israel strikes, oil and gas shipments through the route have slowed amid rising threats from Iran.
Around 20 per cent of the world’s oil supply passes through the Strait of Hormuz. On average, over 20 million barrels of crude and fuel move through it daily. For India, about 2.5-2.7 million bpd of crude imports transit this route, mainly from Iraq, Saudi Arabia, the UAE and Kuwait.
India also imports 80-85 per cent of its LPG needs, largely from Gulf producers, with most shipments passing through the same chokepoint.
Any disruption could quickly push up global oil prices, raise fuel costs at home and add to inflation.
Millions of Indians in Gulf nations
Beyond oil, the biggest concern is the large Indian diaspora in the Gulf. More than 10 million Indians live and work in the
Gulf Cooperation Council (GCC) countries -- a bloc comprising Saudi Arabia, the UAE, Qatar, Kuwait, Oman and Bahrain.
The UAE hosts the largest number, with over 3 million Indians. Indians form roughly 35 per cent of the UAE’s population. Saudi Arabia has over 2.7 million Indians, Kuwait over 1 million, and Qatar over 800,000.
These workers are engaged across sectors -- from construction and hospitality to healthcare and services. Many are blue-collar workers, especially in the UAE, while others are professionals and entrepreneurs.
The region is also home to a large number of Indian students. In 2025, the UAE had over 247,000 Indian school students, while Saudi Arabia, Qatar and Kuwait also recorded significant enrolments. The high school enrolment numbers show that many Indian families are settled there long-term.
Trade and business links under pressure
India’s trade ties with Gulf countries have grown steadily. While trade with Iran has declined due to Western sanctions, commerce with Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE has expanded.
India has already implemented a free trade pact with the UAE in May 2022 and signed a Comprehensive Economic Partnership Agreement with Oman last year. It has also started negotiations for an FTA with the GCC bloc.
In 2024-25, India’s exports to the GCC rose to about $57 billion, while imports jumped 15.33 per cent to $121.7 billion. Total bilateral trade reached $178.7 billion, up from $161.82 billion the previous year. The UAE was India’s third-largest trading partner in the last financial year
However, exporters warn that rising tensions are disrupting logistics. Federation of Indian Export Organisations (FIEO) President SC Ralhan said the conflict has already begun to affect global shipping channels, news agency PTI reported.
Air routes are being altered, and maritime trade through the Red Sea and key Gulf straits faces uncertainty. If diversions continue, ships may have to reroute via the Cape of Good Hope, adding 15-20 days to transit time to Europe and the US.
The Bab-el-Mandeb Strait is another critical route linking the Red Sea to the Indian Ocean. It is vital for shipments from Indian ports through the Suez Canal to Europe. During earlier tensions following the Israel-Hamas war in 2024, shippers had to take longer routes, increasing costs and delays.
In January, India’s exports rose marginally to $36.56 billion, while imports surged to $71.24 billion, widening the trade deficit to $34.68 billion -- a three-month high.
Remittances: A key economic cushion
Remittances are another major link between India and the Gulf. India’s remittance inflows have more than doubled from $55.6 billion in 2010-11 to $118.7 billion in 2023-24. These inflows finance nearly half of India’s merchandise trade deficit and help cushion external shocks.
While the US remains the largest source of remittances, the UAE is the second-largest contributor with a share of 19.2 per cent in 2023-24. The UAE is a major hub for Indian migrant workers, especially in construction, healthcare, hospitality and tourism.
States such as Maharashtra, Kerala, Tamil Nadu, Telangana and Karnataka receive a significant share of these funds. For states like Kerala, Gulf remittances are a key pillar of the local economy.
Any disruption in jobs or earnings in the Gulf could affect household incomes in India and weaken a vital foreign exchange stream.
The escalating Iran-Israel conflict is not a distant crisis for India. It has direct implications for energy security, trade stability and the livelihoods of millions of Indians in the region.
How did the stock market react to West Asia crisis?
Indian stock markets fell sharply on Monday as tensions in West Asia increased and crude oil prices moved higher. The benchmark indices -- the Sensex and the Nifty -- were down more than 3 per cent each during early trade.
The 30-share BSE Sensex dropped about 2,743 points after the opening bell, touching a low of 78,543.73 compared to its previous close of 81,287. The NSE Nifty50 also declined heavily, falling around 533 points to hit a low of 24,645.10 against its earlier close of 25,178.65.
The sharp fall led to a big loss in investor wealth. Around ₹6.87 trillion was wiped out as the total market value of companies listed on the BSE slipped to ₹456.4 trillion from ₹463.25 trillion in the previous session, according to data available at 11:55 am.
The Nifty Midcap 100 index was down 1.62 per cent, while the Nifty Smallcap 100 index fell 1.74 per cent.
Trade and business links under pressure
Concerns also grew after fresh disruptions in Saudi Arabia’s energy sector. Saudi Aramco stopped operations at the country’s largest refinery in Ras Tanura, located on the Persian Gulf coast, following a drone strike in the area, according to a Bloomberg report.
The company shut the Ras Tanura refinery, which has a capacity of 550,000 barrels per day, as a precaution while it checked for possible damage.
Saudi Arabia’s official news agency said there was a limited fire at the plant. The blaze was caused by debris after two drones targeting the facility were intercepted. The fire was later brought under control.
The Ras Tanura refinery is an important supplier of transport fuels, including diesel, especially for customers in Europe. It also produces smaller volumes of gasoline. Close to the refinery is Aramco’s largest export terminal for crude oil and refined products. The facility includes storage tanks, port berths and offshore loading points, making it a key hub for global energy supplies. (With agency inputs)
 "West Asia conflict: From oil to remittances, how exposed India is to crisis")
