As the conflict involving Israel, the United States, and Iran enters its third week, the ripple effects are spreading far beyond the Middle East. The ongoing war has already triggered disruptions in global energy markets and threatens to destabilise economies that rely heavily on the Gulf region.
Among the countries facing the greatest potential economic impact is India, which depends significantly on both Gulf energy supplies and remittances sent by millions of Indian workers living in the region.
Economists warn that if the conflict escalates further, India could face a dual economic shock—rising energy prices and declining remittances from overseas workers.
Strait of Hormuz Crisis Hits Energy Supplies
At the heart of the crisis lies the Strait of Hormuz, one of the world’s most critical oil and gas shipping routes. Roughly 20 to 30 percent of global crude oil and liquefied natural gas (LNG) passes through this narrow waterway that connects the Persian Gulf to the Gulf of Oman.
Because of escalating military tensions and retaliatory threats from Iran, shipping through the strait has been severely disrupted. Many insurance companies have withdrawn war-risk coverage for tankers passing through the region, effectively reducing the number of ships willing to transport oil.
For India, this situation is particularly concerning. A significant share of the country’s energy imports travels through the Strait of Hormuz.
Experts estimate that over 80 percent of India’s natural gas and around 60 percent of its crude oil imports depend on this route.
With the shipping corridor under threat, oil prices have surged dramatically. Prices briefly climbed close to $120 per barrel before settling around $100, still far higher than pre-war levels.
Rising Oil Prices Add Inflation Pressure
The spike in oil prices could create broader economic challenges for India.
Higher energy costs increase the price of transportation, manufacturing, and electricity generation. Over time, these costs often translate into higher inflation for consumers.
Energy analysts warn that prolonged disruptions could strain India’s economic growth outlook.
Harsh V. Pant, vice president of the Observer Research Foundation, noted that the country’s energy security is closely tied to the Middle East.
According to Pant, volatility in energy markets could eventually spread to other sectors of the economy, increasing financial pressure on businesses and households.
The International Energy Agency recently attempted to stabilise markets by releasing a record 400 million barrels of oil from strategic reserves. However, the move has not been enough to fully calm global markets.
Iran’s Islamic Revolutionary Guard Corps has warned that it could further restrict oil shipments through the strait, even suggesting prices could climb toward $200 per barrel if the conflict intensifies.
Indian Workers in the Gulf Face Uncertainty
Beyond energy concerns, India is also worried about the safety and employment prospects of its citizens working across Gulf countries.
Nearly 9.1 million Indians live and work in the Gulf Cooperation Council (GCC) nations, including the United Arab Emirates, Saudi Arabia, Qatar, Oman, Kuwait, and Bahrain.
These workers send home an estimated $50 billion annually in remittances, making the Gulf one of the most important financial lifelines for India’s economy.
Remittances play a crucial role in supporting families across the country and contribute significantly to India’s balance of payments.
If businesses in the Gulf slow down due to the war, many migrant workers could face job losses or reduced income.
Industry reports indicate that some oil and gas companies have already reduced operations due to security concerns and Iranian attacks on regional infrastructure.
For many Indian workers, the uncertainty is deeply worrying.
One construction worker in the Gulf told media outlets that he supports his entire family back home through his job and hopes the conflict does not continue for long.
Economic Impact on Millions of Families
Experts estimate that every Indian worker in the Gulf financially supports four to five family members in India.
This means that as many as 40 to 50 million Indians indirectly rely on Gulf employment for their livelihoods.
Talmiz Ahmad has warned that prolonged conflict could weaken the economic stability of millions of households in India.
He emphasised that remittances from the Gulf play a critical role in maintaining India’s economic resilience.
Evacuation Challenges in Case of Escalation
Another major concern is the safety of Indian citizens if the conflict spreads further across the Middle East.
India has the largest expatriate community in the Gulf, far exceeding other countries.
If evacuation becomes necessary, the scale of the operation could be unprecedented.
According to Ahmad, evacuating nine million people during wartime would be extremely difficult.
While India has previously carried out successful evacuation operations—such as during the Gulf War when nearly 200,000 Indians were airlifted from Kuwait—the current numbers are far larger.
Nonetheless, the Ministry of External Affairs has already set up a special control room to monitor the situation and assist Indian nationals abroad.
Indian embassies in the region have also activated emergency helplines to support citizens.
India’s Strategic Balancing Act
As the crisis unfolds, India faces the challenge of protecting its economic interests while maintaining diplomatic ties across the region.
The country maintains strong relationships with both Gulf nations and Iran, making the situation diplomatically sensitive.
Analysts say India may increasingly look toward alternative energy sources, including imports from Russia and the United States, if supply disruptions continue.
However, experts agree that the Middle East will remain a key energy partner for India for the foreseeable future.
For now, policymakers in New Delhi are closely monitoring developments, aware that the outcome of the conflict could have significant consequences for India’s energy security, economic stability, and millions of families dependent on Gulf remittances.
