India is closely monitoring developments in Iran in the wake of joint US-Israeli strikes on Saturday. A sudden void at the apex of Iran’s political structure raises risks of instability and a messy power struggle that would disrupt energy markets and connectivity corridors. India’s interests span oil trade, regional stability and the Chabahar Port project in Iran.

India’s cabinet committee for security (CCS) — the highest level ministerial body for security matters chaired by the prime minister — held an impromptu meeting on Sunday to discuss the fall out from the MENA conflict. It discussed the ripple effects on regional security, trade, and the economy while directing government officials to aid stranded travellers and students.

Where do things stand this afternoon?

  • Top Iranian military and political officials, including the defense minister and commander of the Armed Revolutionary Corps, were killed in Saturday’s strikes alongside Supreme Leader Khamenei;
  • A three-man council including Iranian President Masoud Pezeshkian will run the country during a transitional period until a new supreme leader is chosen;
  • Strikes on Iran will continue “throughout the week or as long as necessary,” US President Donald Trump said, adding he “agreed to talk” to the new Iranian leadership;
  • Oman has been dragged into the conflict after its Duqm port was hit by drones;
  • Israel targeted Beirut and southern Lebanon overnight after Hezbollah fired several missiles at Israel on Sunday. These strikes killed 31 people and injured 149, according to Lebanon's Health Ministry;
  • Saudi Aramco’s Ras Tanura refinery has reportedly paused operations following an Iranian strike near the area. It processes 550k bbl / d of crude and was shut for damage assessment;
  • An undisclosed number of US warplanes crashed in Kuwait this morning, according to Kuwait’s Ministry of Defence. The ministry statement said that the crews survived and are undergoing medical treatment;
  • Several commercial vessels around the Strait of Hormuz were attacked yesterday, prompting ships and tankers to stay away for the time being.
  • The UK has agreed to let the US use British military bases for “defensive” strikes on Iranian missile sites;
  • European powers Germany, France, and the UK have affirmed their readiness to target Iran’s missile and drone launch capabilities;
  • Three US troops were reportedly killed and five wounded in Kuwait. A missile struck a bunker in Israel, killing at least nine and wounding dozens.

Hormuz supply in dire straits

India’s energy security is under acute strain after a near-total halt of liquified natural gas (LNG) traffic through the Strait of Hormuz this morning. At least 13 tankers, including from Qatar and the UAE, have been diverted or halted, raising concerns over near-term cargo availability.

Any disruption on the strait poses immediate macroeconomic risks for India, with an estimated 35-50% of its crude imports transiting the chokepoint, Ajay Srivastava, founder of the Global Trade Research Initiative, told EnterpriseAM.

What does this mean for India? Higher freight and ins. costs, delayed cargoes, a widening current account deficit, and pressure on fuel prices, Srivastava tells us. India is among the largest buyers of Qatari LNG, with Doha ranking as its top long-term supplier. Qatar exported 82.2 mn tonnes of LNG in 2025, with Asia absorbing more than 80% of volumes.

In price terms: Even a limited conflict could add USD 5-20 per barrel to Brent, while a prolonged shipping blockade could push prices above USD 90-100, amplifying inflationary pressures globally, Srivastava says.

Alternate suppliers? While Indian refiners can diversify toward Russia, the US, West Africa, and Latin America, or draw on strategic reserves, these alternatives involve longer routes and higher landed costs, Srivastava said, noting India’s structural exposure to Gulf energy flows.

A USD 10 per bbl rise in average crude prices is expected to increase India's annual import bill by USD 13-14 bn, Prashant Vashisht, senior vice president of corporate ratings at ratings agency ICRA, told EnterpriseAM. While alternative sources exist, they carry elevated freight rates in addition to ins. costs for ships sailing close to these regions.

A global domino effect: With 20% of the global LNG supply effectively stranded behind a 33-km-wide chokepoint, India’s gas supplies have lost a critical supply source. Goldman Sachs warns spot prices could jump 130% to USD 25 per MMBtu of natural gas if this conflict lasts a month — possibly hammering margins for energy-intensive sectors across the corridor.

What’s next? Spot Asian LNG prices may spike if the disruption persists, while higher crude-linked contract prices would further strain India’s import bill and current account.

MEANWHILE- Indian refiners haveincreased cooking gas production to offset supply disruptions at the Strait of Hormuz. India’s Petroleum and Natural Gas Ministry has reportedly met with senior executives from energy companies to discuss contingency plans.

India could also potentially increase crude oil imports from Russia. The country’s crude supplies from Russia have seen a decline over the past few weeks amid US pressure. Imports were projected to decrease by 24% in February. A shift away from Russian crude had so far benefited MENA suppliers, as Indian refiners had started picking more barrels from the UAE, Saudi Arabia, and Iraq in December and January.

Ins. companies pull the plug

General Ins. Corporation of India (GIC Re), the largest state-owned reins. company, will cease covering marine hull war risks in designated high-risk regions beginning tomorrow evening, Business Standard reports. The revised high-risk areas include Pakistani waters, the Arabian Gulf, the Gulf of Oman, parts of the Black Sea, stretches of the Indian Ocean, the Gulf of Aden, and the southern Red Sea, as well as Iran and other sanctioned states. Breach-of-warranty protections will not apply, forcing shipowners to reassess coverage.

Why it matters: India's state owned GIC Re has joined the international Ins. brokers that have increased coverage costs or cancelled contracts with shipping lines across the world. This is likely to have knock-on effects for broader MENA<>India trade ties going beyond the disruptions in energy supplies, as shipping and ins. costs will surge significantly alongside the potential cancellation of ship movement in high risk areas.

Over on the stock market

Indian stock markets stumbled on Monday, with the Nifty 50 and BSE Sensex both dropping over 1.2% on the back of investors fleeing to safe havens. The sell-off was broad, with 15 out of 16 major sectors logging losses, Reuters reports.

Larsen & Toubro, which has heavy Middle East exposure, dropped 5.2%. Oil-sensitive industries like aviation and paint manufacturers also saw steep drops. On the flip side, energy major ONGC and Oil India both gained 0.5% as rising crude prices are expected to boost revenues for these firms.

MEANWHILE- Defence stocks marked significant gains, with Paras Defence and IdeaForge surging over 10%, while Bharat Dynamics and IdeaForce rose by up to 4%. Bharat Dynamics and IdeaForce both corrected some of these gains in mid-day trading.

Aviation impact and evacuations

Retaliatory attacks from Iran have paralyzed one of the world’s busiest aviation corridors, with Dubai International Airport remaining shut after a reported strike. More than 2.7k flights have been cancelled globally and over 12k delayed. Over 300 flights to and from India were cancelled over the weekend and thousands of passengers have been stranded, including hundreds on India routes. Air India, IndiGo, Akasa Air, Qatar Airways, and Emirates have all suspended flights to various locations in the Gulf as of this afternoon, making evacuation of India’s mns of migrant workers near impossible.

Indian expats in the GCC: An Indian national was among 58 foreign workers injured in an Iranian strike against the UAE. Over 9 mn skilled and unskilled Indian-origin migrant workers are employed across GCC countries — 3.5 mn in the UAE, 2.6 mn in Saudi Arabia, 1 mn in Kuwait, and the rest spread across Bahrain, Qatar, and Oman. Israel employed some 20k Indian workers as of August 2025.

India has not given any signal of evacuating these workers and is only advising them tomaintain safety precautions, though a further escalation in the strikes against GCC countries could prompt some of them to flee. India has already advised 10k nationals, including students and workers, to evacuate Iran by any means available. With airports closed and all major airlines canceling flights, any evacuation must be state-led, which means the Indian Navy and Air Force would have to step in.

Adani port operational in Haifa

Despite the escalating conflict, the Adani Group confirmed that its jointly operated Haifa port in Israel remains fully secure and operational. The port’s employees are safe and the infrastructure is completely intact and functional, the company said in a statement.

Context: Over the weekend, Iran launched retaliatory drone and missile attacks at Israel — including the Haifa area. While the port is running normally, Adani's statement did not specify whether any projectiles actually landed on port grounds

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