Middle East tensions threaten oil, trade flows for India as crude jumps 8% in Oil & Companies News 06/03/2026 Escalating geopolitical tensions in the Middle East are beginning to ripple through global financial markets and commodity prices, raising fresh concerns for India’s economy given the country’s heavy reliance on energy imports and trade with the Gulf region. A report by Shriram Wealth warns that the ongoing conflict involving the US, Israel and Iran could create short-term volatility in oil prices, financial markets and supply chains. However, it notes that India’s strong macroeconomic position could help cushion the broader impact. The report highlights that the Middle East remains strategically critical for India. Nearly 9 million Indians live in the region, contributing roughly 38% of India’s total remittances, while the region accounts for around 15% of India’s exports and 21% of imports. Oil shock risks and inflation impact Energy prices are among the biggest transmission channels through which geopolitical tensions affect India’s economy. The report noted that crude oil prices jumped about 8.1% after the escalation of tensions, reflecting concerns about supply disruptions. Precious metals also rallied, with gold rising 2.15% and silver gaining 1.63%, as investors sought safe-haven assets amid rising uncertainty. India, which imports nearly 85% of its crude oil requirements, remains highly vulnerable to such price shocks.According to the analysis, the Reserve Bank of India has assumed an average crude oil price of $70 per barrel for the second half of FY26, while the Indian crude basket has averaged around $65 per barrel so far. However, even moderate increases could affect the domestic economy.The report estimates that a 10% rise in crude prices above the baseline could increase inflation by about 30 basis points while lowering GDP growth by around 15 basis points, assuming a full pass-through of higher fuel costs to consumers. Currency pressure and market volatility Financial markets reacted quickly to the rising tensions. Equity markets across Asia declined following the geopolitical developments. India’s Nifty 50 fell 1.24%, while other Asian indices also posted losses during the period. The Indian rupee also weakened, depreciating 0.43% against the US dollar, reflecting global risk aversion and a strengthening dollar. A weaker currency can further amplify inflationary pressures by making imported commodities such as crude oil more expensive. The report estimated that a 5% depreciation in the rupee to around ₹92.4 per dollar could increase inflation by roughly 35 basis points, although it could provide a slight boost to GDP growth by improving export competitiveness. Strait of Hormuz disruption could hit energy supply One of the most immediate risks to global energy markets lies in the Strait of Hormuz, one of the world’s most critical oil transit chokepoints. The report notes that the 33-kilometre waterway handles roughly 20% of the world’s oil supply, connecting major producers such as Saudi Arabia, the UAE, Iraq and Qatar with global markets. Recent tensions have reportedly led to an unofficial slowdown in shipping traffic through the strait, with several vessels delaying movement as the conflict evolves. Any prolonged disruption could significantly tighten global oil supply and push prices higher, directly affecting energy-importing economies like India. Exporters have also raised concerns about disruptions along ot