Renewed US-Iran conflict: What do fresh West Asia tensions mean for India?

The attacks on commercial vessels in the Strait of Hormuz brought maritime traffic to a standstill and reignited concerns over global oil supplies and trade

The ceasefire between Iran and the US, announced just two weeks ago after months of unrest in West Asia, has collapsed.

 

The US struck Iran again on Thursday, a day after its first round of attacks early Wednesday. President Donald Trump said the interim agreement with Iran was over.

 

Washington said the latest strikes were in retaliation for attacks on tankers in the Strait of Hormuz. In a post on Truth Social on Thursday, Trump warned Iran that any further attacks on commercial shipping would invite consequences that would “get much worse”.

 

Iran's port city of Chabahar, where India has invested heavily and manages its Shahid Beheshti terminal, found itself in the line of fire as the US expanded its military offensive against the country.

 

 

The attacks on commercial vessels in the Strait of Hormuz have reignited concerns over global oil supplies and trade, with maritime traffic in the waterway coming to a near standstill on Thursday. But what could the latest escalation mean for India?

 

The immediate impact on India

 

On Wednesday, India’s benchmark indices plunged as investors assessed the implications of renewed West Asia tensions. As Trump said that the ceasefire with Iran has come to an end, stock markets witnessed a broad-based sell-off, with Nifty and Sensex falling more than 2 per cent each.

 

The BSE Sensex touched an intraday low of 76,259.03, down 1,921 points, or 2.45 per cent, while the Nifty 50 made a low of 23,805.20, down 593 points, or 2.44 per cent (Write the closing figure as well). 

 

Both benchmark indices are up on Thursday, and as of 12:00 PM, the Nifty50 was up 169.05 points or 0.71 per cent at 24,051.10, and the Sensex rose 532 points or 0.7 per cent to 77,035.37. Sensex closed at 76,503.60, down 1,677.12 points or 2.15 per cent, while Nifty50 ended at 23,882.05, down 516.65 points or 2.12 per cent.

 

Crude oil prices, on the other hand, settled nearly 5 per cent higher on Wednesday. Brent futures rose $3.86, or 5.2 per cent, to settle at $78.02 a barrel, the highest since June 19. US West Texas Intermediate (WTI) crude rose $3.08, or 4.4 per cent to $73.52, the highest since June 22.

 

In Thursday’s opening trade, oil prices jumped over one per cent. Brent crude futures rose 86 ‌cents, or 1.1 per cent, to $78.88, while US West Texas Intermediate crude futures were up 85 cents, or 1.2 per cent, at $74.37 a barrel.

 

What could happen if the conflict escalates further?

 

Sumit Ritolia, Manager at Modelling and Refining at Kpler, in a LinkedIn post on Wednesday, said, “India's crude import basket today is far more resilient than it was a few years ago.”

 

The crude oil flow through the Hormuz had not fully recovered to the pre-conflict levels before the latest escalation began. But Indian refiners have been successfully managing supply through a diversified import portfolio over the past 100 days, Ritolia pointed out.

 

He said that Russian crude continues to anchor a significant share of Indian oil imports, while Saudi Arabia and the United Arab Emirates (UAE) delivered oil barrels to India via bypass infrastructure, providing an additional layer of supply security.

 

Furthermore, West African and Latin American grades also continue to supplement refinery requirements.

 

“Cargoes that can safely transit the Strait of Hormuz are still expected to move, although freight rates and insurance costs could rise if tensions persist,” Ritolia added.

However, he added that the market needs to pay closer attention to LPG and LNG, as they have fewer short-term substitution options than crude oil and remain more exposed to supply and shipping disruptions in the Gulf.

 

“A prolonged period of instability could tighten availability, increase freight costs, and add pressure to regional prices again as we have seen over last few months.”

 

He added, “For now, India's crude supply story remains one of diversification and resilience, not immediate scarcity.”