{"id":86977,"date":"2026-03-06T00:00:00","date_gmt":"2026-03-06T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/mena-india\/?p=86977"},"modified":"2026-03-06T10:31:45","modified_gmt":"2026-03-06T10:31:45","slug":"india-faces-an-energy-fertilizer-and-export-crisis-as-gulf-conflict-chokes-supply-chains","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/mena-india\/2026\/03\/06\/india-faces-an-energy-fertilizer-and-export-crisis-as-gulf-conflict-chokes-supply-chains\/","title":{"rendered":"India faces an energy, fertilizer and export crisis as Gulf conflict chokes supply chains"},"content":{"rendered":"

A prolonged conflict in the Gulf impacts Indian corporates through higher energy prices, logistics disruptions, and a possible moderation in remittance inflows<\/strong>. Oil and gas, fertilisers, and airlines are the sectors most exposed to the ongoing conflict, according to Jitin Makkar, senior vice president at the India-based credit rating agency ICRA.<\/p>\n

India\u2019s exposure stems largely from its dependence on Gulf-linked energy flows<\/strong>. Around 40% of India\u2019s crude<\/a> imports transit the Strait of Hormuz, while domestic crude inventories cover only about 25 days of demand<\/a>. The Middle East also supplied roughly USD 70 bn<\/a> worth of crude and petroleum products to India in 2025, making the region central to the country\u2019s fuel supply chain.<\/p>\n

Gas supply chains disrupted<\/p>\n

QatarEnergy<\/a><\/strong>\u2019s force majeure on gas export contracts is disrupting LNG supplies to India. <\/strong>Qatar\u2019s plants are unlikely to restart for at least two weeks and may need another two to return to full production, according to a statement<\/a>. The halt followed Iranian drone strikes that targeted the Ras Laffan industrial complex, the country\u2019s main LNG export hub.<\/p>\n

Why it matters: <\/strong>The Middle East accounted for around 68.4% of India\u2019s LNG, leaving gas supplies exposed if tensions escalate, ICRA told us. Qatar is India\u2019s largest LNG supplier, delivering about 11.4 mn tonnes<\/a> annually, or more than 40% of India\u2019s LNG imports. <\/p>\n

India\u2019s<\/strong> gas supply chain is entering a period due to the disruptions. <\/strong>India's Petronet LNG stated<\/a> three tankers were unable to reach Qatar\u2019s Ras Laffan terminal, prompting force majeure notices to suppliers and buyers including Gas Authority of India Ltd (Gail), Indian Oil, and Bharat Petroleum Corporation (BPCL). Refiners are quoting three times the price paid a month earlier<\/a>, which is forcing buyers to walk away. <\/p>\n

Industrial supply cuts have already begun:<\/strong> Gail may curb gas supplies to industrial<\/a> customers even as supplies from other contracts remain unaffected for now. Gujarat Gas has reduced<\/a> allocations to the ceramic industry in Gujarat\u2019s Morbi<\/a> by 50%. Meanwhile, the energy retailers are advising industrial consumers to switch to cheaper alternatives like naphtha or fuel oil. <\/p>\n

PLUS<\/strong>: India may be looking at a cooking gas crunch within weeks <\/strong>as escalations in the Gulf disrupt liquefied petroleum gas (LPG) shipments, threatening supplies to mns of households and adding to inflation risks, Hindu Businessline<\/a> reports. <\/p>\n

LNG is also a key feedstock for fertilizer production.<\/strong> Fertilizer producers, responsible for nearly 30% of India\u2019s gas consumption, warn production cuts may follow if LNG supplies do not resume soon. <\/p>\n

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High input costs for farmers <\/p>\n

An increase in global fertilizer prices <\/strong>could lead to higher input costs<\/a><\/strong> for Indian farmers ahead of the upcoming sowing season. <\/strong> Diammonium phosphate prices are projected to touch USD 1k per tonne, up from roughly USD 850 per tonne. Already urea prices have increased to around USD 530 per tonne from USD 492, Hindu Businessline<\/a> reports. <\/p>\n

Why it matters: <\/strong>About 30 of India\u2019s 32 urea plants rely on natural gas as feedstock, with roughly 60% of LNG<\/a> used in fertilizer manufacturing imported from Qatar. As the critical supply link between Qatar and India snaps, fertilizer giants are left with no choice but to pass massive costs to the farmers. A surge in alternative fuel procurement could be next, which could alleviate demands to increase fertilizer subsidies for the government.<\/p>\n

MRPL stops oil exports<\/p>\n

State-owned Mangalore Refinery and Petrochemicals Ltd. (MRPL) has <\/strong>notified customers<\/a><\/strong> that it will suspend exports of refined fuels<\/strong>, as crude shipments through the Strait of Hormuz remain threatened. The refiner has informed buyers it may be unable to honor supply commitments if incoming crude cargoes are disrupted. The company, which operates a 300k bbl \/ d facility in Karnataka, has not formally declared force majeure. MRPL exports diesel, gasoline, and jet fuel, and currently holds crude stocks sufficient for roughly two weeks of refinery operations.<\/p>\n

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Aviation disruptions easing?<\/p>\n

Indian airlines and Emirati airlines are gradually restoring connectivity to the Middle East and long haul destinations as airspace restrictions ease. <\/strong>Carriers including Air India, Air India Express, IndiGo, SpiceJet and Akasa Air have added capacity and scheduled special services to reconnect routes affected by the disruptions, Business Standard<\/a> reports. <\/p>\n

UAE-based Etihad Airways will also resume a limited commercial flight schedule from 6 March, operating services between Abu Dhabi and Indian cities<\/strong>, the airline said on X<\/a>. SpiceJet<\/a> and Akasa Air<\/a> are running select special flights from Fujairah and Abu Dhabi to bring stranded passengers back to India. <\/p>\n

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Exporters could face earnings pressure<\/p>\n

Export-oriented sectors with exposure to Gulf markets \u2014 including gems and jewellery, chemicals, pharmaceuticals and agriculture <\/strong>\u2014 could face near-term earnings pressure if disruptions persist, ICRA told us. <\/p>\n

Why it matters: <\/strong>The Gulf is a major transit and logistics hub for time-sensitive shipments. GCC is India\u2019s largest trade bloc accounting for 15.4% of India\u2019s global trade<\/a>. <\/p>\n

Credit transmission:<\/strong> ICRA told us that if trade disruption is prolonged, then credit stress would principally transmit to Indian exporters via two channels: (a) Revenue loss upon order cancellations and shipment delays; (b) longer payments cycle for exporters where the contractual terms with buyers are on cost, ins. and freight (CIP) basis.<\/p>\n

The exposure is particularly visible in the following sectors: <\/strong><\/p>\n