India File: Iran conflict threatens sweet-spot economy - Reuters

<a href="https://news.google.com/rss/articles/CBMiowFBVV95cUxQR2xxM0Rvd084UkIzbjdoRF9mcUNvbGdzLV9IUjRDRC1iUEhPX2ZQLWNSWWJiUGliYWNiZmtid2FhX3djYXVtWnF4dHVoM1JtczdrRkJlZXdzN3BUOFplekpUSkJzUVlqQlJhSG1aVDd4YVJVQ2xuaXFfNVdXZ3Bnb1Yza2tib3JzTWpMSFZabTVkWWczOUZ4aXdCSTVUTXU2ZHo0?oc=5" target="_blank">India File: Iran conflict threatens sweet-spot economy</a>&nbsp;&nbsp;<font color="#6f6f6f">Reuters</font>

BMI warns that the Iran-Israel conflict could dent India’s growth outlook by discouraging investment and raising energy costs, potentially offsetting gains from upcoming trade deals with the US and EU. While it retains a 7% GDP forecast for FY27, risks are rising—especially if disruption in the Strait of Hormuz pushes up oil prices, which could directly shave up to 0.5 percentage points off growth.

The ongoing conflict between the US and Iran has sent crude oil prices rising, raising alarms for India's import-dependent economy. The surge in oil prices could inflate India's import bill, widen its current account deficit, weaken the rupee, and trigger inflationary pressures. This may also result in foreign capital outflows from the country. The situation is being closely monitored by economists and market analysts alike.

At the heart of the economic concern is the Strait of Hormuz, through which nearly 20% of global petroleum liquids and about a fifth of global LNG shipments transit. India, which consumes roughly 5.5 million barrels of crude oil per day and imports more than 80% of its requirement, is particularly exposed. Around 1.5-2 million barrels per day of India’s crude imports pass through this narrow corridor. In FY2025, nearly 50% of India’s crude oil imports and 54% of LNG imports were routed via Hormuz. Any disruption — or even the perception of risk — can inject a geopolitical premium into oil prices.

India faces a massive economic challenge as the West Asia conflict puts the Strait of Hormuz—the route for 50% of India's crude and 54% of its LNG—at the center of a global oil shock.

India’s energy security has come under intense pressure after the United States (US) and Israel launched a large-scale offensive against Iran on February 28, triggering fears of supply disruptions through the Strait of Hormuz and a renewed surge in global oil prices. For New Delhi, the immediate concern is not direct military spillover but the risk of a sharp energy shock that could ripple through the broader economy.