India hit by high oil prices, flight cancelations amid Iran conflict

New Delhi is feeling pressure from tensions in the Middle East that show no signs of abating, with rising oil prices likely to increase the country’s already large energy import bill, while disruptions to flight routes are hampering airline operations.

India imports nearly 85% of its crude oil, equivalent to about 4.2 million barrels per day, said Pankaj Srivastava, senior vice president of energy research firm Rystad Energy, adding that even “a price increase of a few dollars can have a material impact.” [the country’s] “Energy Economics.”

“to rise [oil] He added that the prices will affect the balance of payments and could increase pressure on the rupee.

Oil prices have risen since the US and Israeli strikes on Iran The fourth largest oil producer In OPEC – it started over the weekend, highlighting the supply shock. The Islamic Republic’s Supreme Leader, Ayatollah Ali Khamenei, has been killed, sparking waves of attacks by Tehran across the region, targeting countries in the Middle East with US military bases.

Brent crude Prices reached a new 52-week high on Monday, rising 9.3% to $79.40 a barrel.

“Every sustained increase of $10 per barrel in oil prices will directly impact Asia’s GDP growth by 20-30 percent.” [basis points]Morgan Stanley said in a note on Sunday, adding that India may be particularly vulnerable.

Analysts said India’s current account deficit, which stands at 1.2% of GDP, will widen by 50 basis points for every $10-per-barrel rise in oil prices.

“Thailand, Korea, Taiwan and India will be more vulnerable to the negative impact on growth due to their broader balances of oil and gas,” the report said.

Experts said that the movement of oil through the Strait of Hormuz was halted due to extremely high insurance rates due to Iranian attacks on American bases in the Gulf states, which is also… demonstrate Oil prices.

The Strait of Hormuz is a critical waterway that connects major energy producers – including Saudi Arabia, Iran, Iraq and the United Arab Emirates – to global markets, and is responsible for the passage of about 20% of the world’s oil supply.

The latest ship tracking data indicates that about half of India’s crude oil imports currently pass through the Strait of Hormuz, global brokerage Nomura said in a report on Sunday.

“It’s bad timing for India,” Ellen Wald, president of Transversal Consulting, told CNBC.Within IndiaShe added that “India’s oil purchases will be under scrutiny” if it buys an additional shipment of Russian oil.

India imported 1.16 million bpd of Russian oil as of last week, lower than its average consumption of 1.71 million bpd in 2025, according to energy data firm Kpler. This oil was being replaced by supplies from the Middle East, which have now been disrupted.

Since August last year, Indian exports to the United States have been subject to customs duties amounting to 50%, of which 25% is a punitive tariff aimed at discouraging India from buying Russian oil.

Following an interim trade deal last month, the United States removed punitive tariffs on India, saying New Delhi had “committed to stop importing Russian Federation oil directly or indirectly” and would purchase “energy products from the United States.”

But Washington warned New Delhi that it would monitor India’s imports of Russian oil and that any attempt to resume purchases could lead to renewed punitive tariffs. This makes any supply disruption due to the Iranian conflict more difficult for India.

Despite the scrutiny, Wald said, “I have a feeling no one would really blame them.” [India] “To do what they need to do to get through next month.”

Rystad Energy’s Shrivastava said India resuming purchases of Russian oil remains a likely scenario, as “a significant amount of Russian crude of the appropriate grade is already available on the water.”

Shares of Indian passenger airline IndiGo, trading as Interglobe Airlinesopened down nearly 5% on Monday.

The company, which did not respond to CNBC’s request for comment, said in a post on Monday that “the pause is temporary comment Selected international flights operating through parts of Middle East airspace have been extended.”

Tata Group and Singapore Airlines-Its Air India-owned carrier canceled all flights to and from the UAE, Saudi Arabia, Israel and Qatar on Monday, it said in a post on X. It also canceled some flights from New Delhi to Europe, but said many of its other flights to Europe and North America would operate as per standards. table “Using alternate routes through available airspace.”

Trump told the Daily Mail on Sunday that the conflict with Iran could continue for the next four weeks. Iranian security chief Ali LarijaniMeanwhile, he said in a post on X that Tehran has no plans to enter into negotiations with the United States.

If the situation escalates further, India may seek access from China to use its airspace from the north, allowing planes to fly over the Commonwealth of Independent States to Europe, Martin said.

A total of 350 flights were operated by Indian domestic airlines Canceled on Sunday, according to India’s aviation regulator.