‘Govt must review energy risk scenarios due to Iran-Israel war’

New Delhi: With the Israel-Iran conflict intensifying, the government must urgently review energy risk scenarios, diversify crude sourcing, and ensure strategic reserves are sufficient, think tank GTRI said on Sunday.

Due to the war, India is increasingly at risk of collateral economic fallout, with energy security, trade routes, and key commercial interests facing growing uncertainty, the Global Trade Research Initiative (GTRI) said.

“The escalating hostilities and rising regional tensions are posing direct threats to India’s strategic and economic links with West Asia,” GTRI Founder Ajay Srivastava said, adding India has significant trade exposure to both warring nations.

In 2024-25, India exported goods worth $1.24 billion to Iran and imported $441.9 million in return. Trade with Israel was even more substantial, with $2.15 billion in exports and $1.61 billion in imports.

“But more critical than these bilateral flows is India’s reliance on the region for energy: nearly two-thirds of its crude oil and half of its LNG imports pass through the Strait of Hormuz, which Iran has now threatened to close,” he said.

This narrow waterway, only 21 miles wide at its narrowest point, handles nearly a fifth of global oil trade and is indispensable to India, which depends on imports for over 80 per cent of its energy needs.

He said that any closure or military disruption in the Strait of Hormuz would sharply increase oil prices, shipping costs, and insurance premiums, triggering inflation, pressuring the rupee, and complicating India’s fiscal management.