Iran-Israel Conflict: Impact on India’s Trade, Oil Security & UPSC Current Affairs

Why the Iran-Israel Conflict Matters to India
The Iran-Israel conflict, now in its fourth day, risks escalating into a regional war with cascading effects:
Marine Chokepoints at Risk: Iran threatened to block the Strait of Hormuz (handles 30% of global oil, 66% of India’s crude imports).
Red Sea Trade Disrupted: Houthi attacks had already cut Red Sea traffic by 70%; recovery efforts now face collapse.
Cost Surge: Freight and insurance premiums could spike 15-20%, hitting Indian exports to Europe/West Asia.

India’s Critical Vulnerabilities
Energy Security: 80% of India’s oil is imported; a Hormuz blockade would trigger fuel shortages and inflation.
Trade Exposure:
Iran: $1.24B exports (FY25), $441M imports.
Israel: $2.15B exports (tech, diamonds), $1.61B imports.
Macro Risks: Goldman Sachs warns Iranian oil could fall by 1.75M barrels/day, raising global prices.

Strategic Implications for UPSC
Prelims Focus: Key chokepoints (Hormuz, Red Sea), GTRI trade data, insurance/freight terms.
Mains GS-II:
Impact of West Asian conflicts on India’s interests.
Balancing ties with Iran (Chabahar) vs. Israel (defense, tech).
GS-III: Oil dependency, inflation risks, and export resilience.
 

Sample Q&A for Exams
Q: How could Iran-Israel tensions affect India’s oil imports?
A: 66% of India’s crude passes through the Strait of Hormuz—a potential Iranian blockade would cripple supply.
Q: What is the ‘freight surcharge’ in maritime trade?
A: Extra fees levied by shippers to offset war risk, fuel costs, or route diversions (e.g., Red Sea → Africa).
Q: Which Indian exports are most vulnerable?
A: Electronics, textiles, and gems to Europe/West Asia face delays and 20% higher logistics costs.
Q: Why is the Strait of Hormuz strategically vital?
A: It’s the world’s narrowest oil transit point (21 miles wide), handling 30% of global sea-traded oil.
Q: How might this conflict impact UPSC’s “Indian diaspora” topic?
A: 8.9 million Indians in Gulf nations face instability risks, affecting remittances ($110B/year).