Shipping rates from India are almost stable despite the Iran-Israel conflict, but the government is closely monitoring the situation which could “spiral” if Iran imposes the closure of the Strait of Hormuz, government officials said on Tuesday, June 24.
The officials said that the ministry of commerce has been mandated to monitor the situation in the Middle East as there are very valid apprehensions that if the Strait of Hormuz is closed it will trigger major disruptions in freight movement through West Asian routes and shipping rates can skyrocket.
The ministry is in talks with several stakeholders including air cargo companies, insurance companies and cargo handlers to get inputs for planning contingencies if the conflict escalates and trade systems through the region worsen, the officials said.
“A key concern is the potential disruption to the Strait of Hormuz, through which roughly 60–65 percent of India’s crude imports transit. Any blockade or military escalation in this vital maritime corridor would severely impact India’s energy security, drive up oil prices, and trigger inflationary pressures at home,” Global Trade Research Initiative (GTRI), a business and industry think-tank, said in a statement.
“A wider regional escalation could threaten India’s much larger trade with the broader West Asian region - including Iraq, Jordan, Lebanon, Syria, and Yemen - where Indian exports total $8.6 billion and imports stand at $33.1 billion,” it said.
A report by the research wing of the State Bank of India (SBI), India’s largest banker, said, “The escalating conflict between Iran and Israel, now involving direct US military strikes, poses serious risks to India’s economic stability, particularly through elevated crude oil prices and global supply chain disruptions.”
India imports nearly 90 percent of its crude oil needs, with about 40 percent of these shipments passing through the Strait of Hormuz - a critical maritime chokepoint between Iran and Oman. The strait handles nearly 20 percent of global petroleum liquids consumption and is now under threat due to the intensifying conflict.
While India does not currently source crude oil from Iran, disruptions in the Strait of Hormuz could severely affect supply flows from other key exporters. In 2024, oil flows through the strait averaged 20 million barrels per day, and there are few viable alternatives to reroute this volume, the SBI report notes.