Iran-Israel conflict puts 50% of India’s oil supply at risk:Gold and silver prices may rise; 10% exports at risk if Hormuz closes

The conflict between Iran and Israel could impact India’s oil, trade, stock market, and gold and silver prices. If the war between the two countries escalates, the Strait of Hormuz could be closed, putting half of India’s monthly oil supply at risk. In addition, India’s non-oil exports could also be affected, as more than 10% of these supplies come from the region. Experts believe that if the conflict intensifies, crude oil prices could rise sharply. Higher oil prices would lead to increased inflation, which would also affect the stock market. In such a situation, the market could see heavy selling and a decline. On the other hand, when global tensions rise, investors tend to move towards safe-haven assets. During such times, people prefer buying gold and silver, so their prices are likely to increase. Why the Strait of Hormuz is so crucial for India The Strait of Hormuz, located between Iran and Oman, is the world’s most important oil route. India imports most of its crude oil from countries like Saudi Arabia, Iraq, and the UAE, with a large portion passing through this route. According to statistics, about 50% of India’s monthly oil supply comes via this route. If Israel attacks Iranian oil facilities or Iran blocks this passage, the supply chain could be completely disrupted. Crisis for 10% of India’s non-oil exports It’s not just oil—India’s trade is also at risk due to the Iran-Israel conflict. A report states that more than 10% of India’s total non-oil exports pass through the Strait of Hormuz. This includes basmati rice, tea, spices, fresh fruits and vegetables, and engineering goods. Most exports to West Asian (GCC) countries rely on this route. If the route is blocked or shipping costs rise, Indian exporters’ expenses will increase, making Indian goods more expensive in global markets. Recently, India exported around $47.6 billion worth of non-oil goods to Gulf countries, which depend on maritime routes connected to the Strait of Hormuz. This is about 13.2% of India’s total non-oil exports of $360.2 billion. These figures indicate how severely Indian trade could be affected if supply through these routes is disrupted. India exports most goods through Hormuz route to UAE Rising crude prices could hit Indian stock markets Crude oil has always been a sensitive factor for Indian stock markets. If Brent crude prices exceed $80–85 per barrel due to Iran-Israel tensions, heavy selling could be seen in Indian markets. On Friday, Brent crude prices rose 2.87% to $72.87 per barrel. Sectors such as paints, tyres, aviation, and logistics, which depend on crude oil, will see their margins directly impacted. Foreign institutional investors (FIIs) are already withdrawing money from Indian markets, and this war could intensify geopolitical tensions further. Gold and silver prices may also surge During times of uncertainty, investors shift money from equity markets to safe-haven assets like gold and silver. Commodity experts believe that the Iran-Israel war could push gold and silver prices to new highs. If the US gets directly involved in the conflict, demand for gold against the dollar is expected to rise. Both industrial and investment demand for silver could increase, making it a potentially profitable avenue for investors in the near future. Current prices: 10 grams gold ₹1.59 lakh, silver ₹2.66 lakh/kg On Friday (27 February), gold and silver prices rose. According to the India Bullion and Jewellers Association (IBJA), the price of 10 grams of 24-carat gold increased by ₹1,075 to ₹1.59 lakh, compared to ₹1.58 lakh the previous day. Meanwhile, one kilogram of silver rose ₹6,033 to ₹2.66 lakh, up from ₹2.61 lakh the day before. Fear of rising inflation due to the war If crude oil becomes expensive, the chances of a cut in petrol and diesel prices in India will disappear. Higher fuel costs will increase transportation expenses, which will directly affect the prices of fruits, vegetables, and other essential goods. This could lead to a rise in the retail inflation rate. Market experts say the current situation is one to “wait and watch” Market experts say that the current situation is a wait-and-watch one. The direction of the global market will depend on Israel’s next move. If Israel targets only military installations, the market could recover quickly. However, if oil refineries or the Hormuz route are targeted, it could signal a prolonged economic slowdown. Learn about the Strait of Hormuz… What is the Strait of Hormuz? The Strait of Hormuz is a narrow waterway that connects the Persian Gulf to the Gulf of Oman and further to the Arabian Sea. Iran borders it to the north. Oman and the United Arab Emirates (UAE) are to the south. All oil-producing countries are located around it. Therefore, this water route is used for oil supply worldwide. The Strait of Hormuz is approximately 167 km long. Both its entrances are about 50 km wide, while the narrowest part is about 33 km wide. It has a designated 3 km wide shipping lane for incoming and outgoing maritime traffic. Why is the Strait of Hormuz so important? According to the US Energy Information Administration (EIA), about 20% of the world’s total petroleum passes through the Strait of Hormuz. Approximately 17.8 million to 20.8 million barrels of crude oil and fuel travel through this route daily. According to the International Energy Agency (IEA), Iran itself exports 1.7 million barrels of petroleum daily through this route. A unit of the US Navy provides security for commercial ships passing through this route. Besides Iran, other Gulf countries like Iraq, Kuwait, Saudi Arabia and UAE also export most of their oil through this route. Most of these exports go to Asian countries. In 2022, 82% of the total oil passing through Hormuz went to Asian countries.