Israel-Iran conflict to impact oil supply to India, increase export costs by 40-50%

Israel's attack on Iran raises oil prices, posing risks to India's economy with potential supply disruptions and increased export costs.

Israel’s attack on Iran and heightened tensions in the area pose significant risks to India in terms of curtailed supplies of oil and a 40-50% increase in the export costs, according to analysts and trade experts. 

Early on Friday (June 13, 2025), Israel said it had struck “dozens” of nuclear and military targets in Iran, following which Iran reportedly retaliated with drone strikes of its own.

Following these developments, global oil prices jumped about 8% in a single day, sparking fears that a sustained escalation could push inflation in India up, since it imports about 80% of its oil requirement. 

“The ongoing Iran-Israel conflict is likely to pose risks to oil supply even though India does not directly import large volumes of oil from Iran,” Amit Kumar, Partner and Energy & Renewables Industry Leader at Grant Thornton Bharat told The Hindu. “India imports more than 80% of its crude oil needs. Hence, even if direct imports from Iran are minimal, global price spikes due to conflict will raise crude oil import costs.” 

Further, Mr. Kumar said that around 20% of global oil passes through the Strait of Hormuz, which is located between Iran to the north and the Arabian Peninsula to the south. 

“Any disruption around the Strait of Hormuz may affect oil shipments coming from Iraq, Saudi Arabia, and the UAE who are key suppliers for India,” he added. 

Disruptions in this area could also significantly hurt India’s exports in terms of time as well as costs, according to Pankaj Chadha, Chairman of the Engineering Exports Promotion Council of India.