Escalating hostilities in West Asia risk renewed energy, inflation shocks: Moody’s

Escalating West Asia hostilities threaten energy supply, inflation spikes, and economic strain on Asian commodity importers, warns Moody's.

Escalating hostilities in West Asia are heightening risks for India and other Asian commodity importers, as military strikes and retaliatory attacks disrupt key energy and trade routes, Moody's Analytics said on Monday (March 2, 2026).

The United States and Israel launched military strikes on targets in Iran over the weekend. Tehran retaliated with missiles and drones aimed at Israel and countries hosting U.S. forces, including the United Arab Emirates, Qatar, Kuwait, Bahrain, Iraq, Jordan and Saudi Arabia.

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Media reports suggest the conflict has effectively closed the Strait of Hormuz, a key conduit for global energy flows. Roughly one-third of the world's seaborne crude oil exports and about 20% of liquefied natural gas shipments transit the narrow waterway.

India, the world's third largest oil importer, imports roughly half of its oil needs through the narrow Strait.

"This (closure of Strait of Hormuz) raises the risk of further disruptions in the Red Sea and across the wider West Asia," Moody's Analytics said. "Airspace closures have compounded the strain, affecting passenger travel and cargo flows through one of the world's most important trade corridors."