 "From oil prices to trade routes, how a war between Israel and Iran is worrying for India")
The likelihood of an all-out war between Israel and Iran keeps increasing by the hour with world leaders working tirelessly to avoid an all-out conflict in the already volatile region. The conflict has entered Day 4 — it began on Friday (June 13) with Tehran claiming that the Jewish nation’s strikes have killed more than 220 people so far.
As tensions keep rising between the two nations, India is closely watching and monitoring the developments — a full-blown war would have significant implications for New Delhi, from trade to markets.
Here’s a closer look at just what an Israel-Iran conflict would cost India.
What has happened between Israel and Iran so far?
Israel unleashed a new wave of attacks against Iran on Monda y, targeting missile sites after Tehran carried out deadly overnight strikes and both sides threatened more devastation. Israel has claimed strikes as far away as Mashhad in Iran’s far east, 2,300 kilometres from Israel. Additionally, Iran acknowledged Israel had killed three more of its top generals, including General Mohammad Kazemi, the Revolutionary Guard intelligence chief.
Meanwhile, reports have come in that Tehran struck Tel Aviv as well as the port city of Haifa with British maritime security firm Ambrey saying that fires were observed at a power plant in the vicinity of Haifa. Ambrey said it observed video footage of the Israeli military intercepting the attack, followed by impacts from two hypersonic missiles.
What a full-blown Israel-Iran war means for India?
A war between Israel and Iran would have many implications for New Delhi — early signs of the conflict’s impact on the Indian market became visible after Sensex closed 573 points lower on Friday. Moreover, there’s a sizeable Indian population in Israel as well as in Iran, which are currently in danger.
Indians at risk: There are an estimated 18,000 to 20,000 Indian nationals in Israel, including students, and around 85,000 Jews of Indian origin. As of March 10, 2025, 6,694 Indian workers had officially reached Israel. Additionally, according to the Ministry of External Affairs, around 10,765 Indians live in Iran at present. Many of them are traders, academics, or other professionals.
In Israel, the Indian embassy authorities have said that all Indians are safe as of now and they are constantly monitoring the situation. Embassy sources said that it has set up a 24*7 helpline and is maintaining contact with members of the community.
In the present scenario, the Ministry of External Affairs said that it was too perilous a situation to start evacuations from Iran and in the meantime, was engaging Indian students for their safety and that “in some cases” they are “being relocated with the embassy’s facilitation to safer places within Iran”.
Narrating their ordeal, one of the many students in Iran, identified as Imtisal Mohidin, told news agency ANI, “I woke up at 2:30 am on Friday to loud explosions and rushed to the basement. We haven’t slept since.” Imtisal, a 22-year-old third-year MBBS student at Shahid Beheshti University in Tehran, is among the hundreds of Indians in Iran. He further was quoted as saying, “The embassy is in touch and has shared helpline numbers, but we’re really scared. We’re asking the Indian government to bring us back before anything worse happens.”
Oil price spike: While the conflict between Israel and Iran hasn’t erupted into a full-blown war, effects of it can already be felt on oil prices , with the oil market reacting to developments quite sharply.
Crude oil prices increased on Monday (June 16) as both countries target each other’s key energy infrastructure. At 0755 am, the August contract of Brent crude on the Intercontinental Exchange was trading at $75.14 per barrel, up 1.24 per cent from previous close.
For India, while Iran isn’t a supplier of oil owing to US sanctions, the worry remains the Strait of Hormuz, which is located between Iran to the north and the Arabian Peninsula to the south. This area is of significance as nearly 20 per cent of the world’s oil supply is transported.
Any disruption around the Strait of Hormuz, according to analysts, would affect oil shipments from Iraq, Saudi Arabia, and the UAE, who are key suppliers for India.
Trade routes could be hit: A wider conflict between Israel and Iran could hurt India’s exports as many experts believe that cargo vessels will have to continue using Cape of Good Hope route rather than the crucial Red Sea route. This means more time and more costs. For instance, the crisis in the Red Sea when Houthis were attacking vessels, led to an increase in shipping costs. Also, longer voyages tightened vessel availability, exerting inflationary pressure on freight rates.
And India’s trade routes aren’t the only one at risk. India has significant trading relations with Israel and Iran — amounting to a cumulative of $5 billion. This could be significantly impacted if the countries head to a direct war.
Aviation sector to face turbulence: Iran and Israel shutting down their respective airspace could impact the global aviation industry, including India’s. In a post on X, Delhi Airport said, “Delhi airport operations are running smoothly. However, due to evolving airspace conditions over Iran, Iraq and the neighbouring region, some flight schedules have been impacted.”
9-second video of the clearing of Iranian and Iraqi airspace. pic.twitter.com/VZLWbmk9sC
— Flightradar24 (@flightradar24) June 13, 2025
These mass diversions and avoidances will result in longer flights, potential delays and increased fuel costs for multiple carriers operating in and out of West Asia and further east. Already, Air India also said over a dozen of its flights alone had been either diverted or returned.
What do experts have to say?
Most analysts believe that the conflict is unlikely to have any major economic impact on India unless it escalates into a broader and regional war. A senior government official told the Economic Times that given its strong macroeconomic fundamentals, India is on a strong footing to tide over any such global crisis without much bruise.
Ajay Bagga, a banking and market expert, also concurred with this view. Speaking to news agency ANI, he said, “Two countries, separated by 700 km from each other, are causing a major risk-off sentiment and global geopolitical turmoil. As with the short-lived impact of the Gaza conflict, markets will shrug off the Israel-Iran conflict this week and move on, as the boundaries get defined and the risk of a regional war recedes.”
With inputs from agencies
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