The first round of war in the Gulf this year has already had a major impact on the region and the world at large. Yet another can have a catastrophic impact on global energy supplies and the economy, including India.

Iran War: Impact Beyond Region 

The US is approaching midterm elections, and in Israel, Prime Minister Benjamin Netanyahu’s future is hanging by a thread in the 27 October elections. 

The advisory issued by the US to evacuate its staff from Embassies across the Gulf is a preemptive step impending an Iranian retaliation if Washington and Tel Aviv are to launch strikes against Tehran. The scars of Iranian retaliation this year against the Gulf states, which took the international community by surprise, are still visible. 

Kuwait bore the brunt. The United Arab Emirates (UAE) and Qatar reached an understanding with Tehran but are still not out of woods. Oman, with its neutral approach, remained largely unscathed. Bahrain, with a majority Shia population, always remains on tenterhooks. 

If US President Donald Trump, backed by Israeli Prime Minister Netanyahu, were to relaunch strikes against Tehran, the Gulf states could suffer, with damage to their energy supply chains, diaspora, and local economies. The conflict will in turn impact travel to and from the Gulf, where the UAE and Qatar have become hubs for global airlines.  

The trouble in the Hormuz Strait is far from being addressed, and a fresh conflict will increase the cost of insurance for ships, besides attacks on vessels and seafarers. This can have a disastrous impact on Indian energy security and also for the safety of the Indian diaspora in the region. 

The availability of Venezuelan oil to India will not be adequate to address any crisis. Therefore, the flow of Russian oil to Indian refineries must continue to flow. Crude oil is already trading higher following fears of a war. While Netanyahu is fighting an uphill battle to get reelected, the entire region cannot be dragged into a conflict. 

Saudi-Houthi Theatre   

Saudi Arabia handled the Iranian retaliation earlier this year relatively well, showing its resilience and even giving global investors hope that it, along with Oman, is the Gulf country that must be bet upon. But the Houthis have upset all calculations. 

Yemen’s Houthi movement has declared Saudi Arabia's airspace and major commercial airports a military "theatre of operations", triggering a severe escalation in cross-border missile and drone strikes. The Houthis have declared all Saudi airspace and airports a combat zone — exempting only the holy cities of Mecca and Medina — and warned international airlines, workers, and travellers to stay away. Saudi Aramco energy facilities at Shedgum, Tanajib, and Yanbu have faced targeted strikes.

Major international carriers — including Lufthansa and Air India — have suspended flights to the Saudi capital. The persistent strikes have disrupted regional air traffic and caused fluctuations in global oil prices. The Houthis have expanded control to areas around Bab el-Mandeb Strait in September, and the move is threatening the navigation of ships. The turmoil in Ethiopia may further destabilise the situation around the Red Sea, a major route of maritime traffic.

Economic And Security Risks For India

Escalating tensions at the Bab el-Mandeb Strait — driven by Iran-backed Houthi attacks on commercial shipping and regional infrastructure — pose major economic and security risks for India, which relies heavily on the Red Sea corridor for trade and energy imports. 

Nearly 80% of India's merchandise trade with Europe passes through this Strait and the Suez Canal. Disruptions force vessels to reroute around the Cape of Good Hope, driving up freight rates, insurance costs, and delivery times.

A simultaneous squeeze on both the Bab el-Mandeb Strait and the Strait of Hormuz threatens severe price volatility and supply constraints. India cannot sit and watch and issue statements while there is a squeeze on both the Straits. While it continues to hold dialogue with the UAE and Saudi Arabia and gets the assistance of Oman, India should enhance cooperation with other maritime nations in the region to secure shipping routes through coordinated naval patrols and information sharing. New Delhi should monitor the situation through the Information Fusion Centre–Indian Ocean Region (IFC-IOR) to track shipping movements and emerging threats. 

India must increase maritime surveillance capabilities in collaboration with friendly powers, diversify critical trade routes, expand strategic petroleum reserves, and improve supply-chain resilience.

(The writer is a commentator on geopolitics and geoeconomics. Views expressed are personal.)