And be ready — your household budget could just expand significantly. Besides crude oil, more than 80% of India's LPG supplies pass through the Strait of Hormuz, the narrow yet most crucial waterway for energy flows. Following the attack on Iran by the US and Israel, Tehran has now decided to close this route.

LPG Supply

A prolonged conflict would disrupt the LPG supply and push prices.

Last year, India’s LPG consumption stood at about 38-39 million tonnes, with the bulk coming from West Asian countries.

India, the world’s second-largest consumer of LPG, may have to increase its imports of LPG from Russia. Sources said that talks have already begun.

Besides crude oil prices, insurance premiums have already started to surge as well. These may further weaken the Indian rupee and the country's current account deficit. 

India’s Dependence On Russian Oil

Besides LPG, India is already gearing up to increase its oil purchases from Russia, notwithstanding the US threat. In February, Russia topped the list of crude suppliers to India. A senior government official said there was no need for panic and that India had other markets, including Russia, which would increase crude supplies.  

Russian oil typically routes into India through the Black Sea, bifurcating the Middle Eastern routes.

The official said that talks are already underway and things are unlikely to get out of hand.  

However, it is not just the energy sector that will be hit; with India having trade pacts with the UAE and Oman, several other areas may be affected as well. Apart from oil, aviation, infrastructure, textiles, gems and jewellery are sectors that would be hit.

Imports of critical raw material will be impacted by the disruption in trade routes and the closure of airspace.    

India’s Growing Trade With West Asia

India-UAE bilateral trade crossed the US$100 billion mark. Besides this, India has also launched trade talks with the Gulf Cooperation Council (GCC), including Saudi Arabia.

The current escalation involving the US, Israel, and Iran is far more than a distant regional crisis for India. It goes directly to the heart of India’s economic, strategic and human interests. For New Delhi, the priority is not rhetorical positioning but the protection of national stakes that are immediate, material, and structural

— Former diplomat Sanjay Kumar Verma

Will The Conflict Last?

Many analysts opined that the conflict is expected to be short-lived.  

“We expect a relatively short conflict lasting a few days to a couple of weeks, given the imbalance between the two sides and the depletion of Iran’s leadership,” Emkay Global Financial Services said in a note.