Fatemeh Aman
A new US-Iran crisis in the Persian Gulf need not escalate into a full-scale war to harm India. The fear that the region is sliding into an escalatory cycle in which markets, shipping companies, and insurers begin pricing in the worst-case scenario is enough to create problems for New Delhi, whether in the form of inflationary pressures, higher shipping costs and insurance premiums, and diaspora anxiety.
India’s exposure to Gulf instability is structural. New Delhi may be a rising power in the Indo-Pacific, but the Gulf remains one of its most sensitive economic lifelines. That is why even limited military action involving Iran, Israel, or the United States tends to force India into caution, narrowing its options before it forces anyone else’s.
The Strait of Hormuz is the clearest reminder of how the region exports shock. The International Energy Agency estimates that from January to May 2025, approximately 14.5 million barrels per day of crude oil passed through the Strait of Hormuz, and that China and India’s imports together accounted for 46 percent of those volumes. Even without a blockade, escalation can trigger large pricing reactions because markets price risk, not certainty.