Key Highlights

• India imports approximately 90% of crude oil, making it vulnerable to the Iran-US conflict.

• The Strait of Hormuz is a primary worldwide oil route, carrying about 20% of the global oil trade.

• The restriction imposed on the Strait of Hormuz can lead to higher fuel prices and inflation in India.

• In such global conflicts taking place in which high-business countries are getting involved, making real-time trade insight a non-negotiable aspect for the traders.

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India needs to import about 90% of its crude oil requirements and about 60% and 50% of its LPG and LNG needs, respectively. These are not just numbers; they are also a reflection of the needs and requirements of one of the largest economies in the world. This has been put to the test with the ongoing US-Iran conflict, which has affected the supply of oil through one of the most important routes - the Strait of Hormuz.

The Middle East crisis has highlighted with clarity and precision an important fact: India claims that it is comfortably placed to handle its oil, LPG, and LNG needs, but there is a need to speed up the process so that India's energy security needs are taken care of.

The Importance Of The Strait Of Hormuz

The Strait of Hormuz is one of the most strategic sea routes, situated between Iran and Oman, connecting the Persian Gulf to the Arabian Sea. This sea route is only 33 km wide but is the most vital oil vessel passage, where 20% of the world’s oil trade passes daily from major oil-producing countries such as Saudi Arabia, Iraq, and the UAE to other countries of the world. This sea route is of utmost significance to India, as most of the crude oil from Gulf countries passes through this passage before reaching other countries such as Mumbai, Mundra, and Cochin. Any kind of conflict with Iran, which may affect the passage of this sea route, may stop or restrict the movement of vessels, leading to an increase in oil prices, inflation, and economic crises for oil-importing countries such as India.

The Top Highly Affected Commodities In India By The Iran-US Conflict Include:

As the Strait of Hormuz is disturbed by the ongoing conflict, these are the products affected:

1. Petrol and Diesel
The rise in crude oil prices worldwide would be reflected in the price of petrol and diesel in India.

2. LPG (Cooking Gas)
The rise in LPG and LNG cylinder prices is a possibility due to an increase in shipping prices.

3. Edible Oils
The prices of edible oils may rise due to a disturbance in supply.

4. Gold and Silver
In a geopolitical scenario, gold and silver are always in demand; their prices would rise.

5. Electronics and Gadgets
The prices of gadgets like mobiles, laptops, etc., would rise.

6. Dry Fruits and Nuts
The price of dry fruits like almonds, pistachios, figs, and saffron would rise due to a disturbance in trade from the Middle East.

7. Fertilizers
The price of fertilizers would rise due to a rise in natural gas prices, which is a raw material for fertilizer.

8. Pharmaceutical Ingredients
The price of raw materials for medicines would rise due to a disturbance in shipping.

9. Plastic Goods
The cost of petrochemicals like ethylene could increase, which means a rise in the price of plastics.

10. Textiles and Apparel
The price of raw materials could increase, which would show in the final cost of clothes and other textiles.

Why Smart Trade Intelligence Matters For Traders During Global Conflicts

In times of such geoeconomic uncertainty as in the past years, it's going on: the Russia-Ukraine war, the Israel-Palestine war, and recently the Iran-US conflict. Conflict between countries means disturbance in trade and policies, which quickly changes the supply chain and leads to a rise in costs. For traders, staying informed is crucial to avoid any naive risk. It's where smart trade intel platforms, such as EXIM, help in providing real-time import-export data, shipment insight, and updated market trend analysis, making sure businesses to identify new suppliers, track demand shifts, and make calculated, risk-free decisions. This allows traders to adapt by having the updated trade data and stay competitive in the global landscape.

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Frequently Asked Questions (FAQs)

1. India is taking which side in the Iran-US conflict?
India is maintaining a de-hyphenated foreign policy in the Iran-US conflict while giving priority to its strategic and economic interests.

2. Which products have started showing their effect on day-to-day life in India?
In day-to-day life, LPG, LNG, petrol, and diesel have started impacting daily life.

3. The Strait of Hormuz is controlled by which country?
The IRGC maintains a strong military presence along the northern coastline and on key islands, allowing them to project power and threaten to close the strait.

4. How can importers and exporters manage risks during global trade disturbances?
Traders can reduce risks by acquiring global trade trends, researching suppliers, and using trade intel platforms such as EXIM by The Dollar Business that provides real-time import-export data and shipment insights.

5. What aspects of global trade are affected by the geopolitical conflict?
Geopolitical conflicts often disturb supply chains, shipping routes, and trade policies. This can increase freight costs, delay shipments, and cause a spike in commodity prices across the international markets.

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