Beyond Oil and Gas: Why an Iran War Could Push Up Prices Across Indian Industries

New Delhi, March 10, 2026 — As the US-Israel-Iran conflict escalates, with missile strikes hitting Gulf energy facilities and threats looming over the Strait of Hormuz, India’s economy faces far more than just higher fuel bills. Disruptions to shipping lanes, LNG supplies and key raw material imports are already rippling through agriculture, chemicals, construction, manufacturing and export sectors — driving up costs that will eventually hit consumers in the form of pricier food, plastics, cement and everyday goods.

India imported goods worth nearly $98.7 billion from West Asia in 2025, including critical non-energy items such as fertilisers, petrochemicals, industrial minerals and diamonds. While crude oil dominates headlines, analysts warn that prolonged closure risks or attacks in the Strait of Hormuz — through which roughly one-third of global urea trade and significant volumes of other commodities flow — could trigger widespread price shocks.

The most immediate threat is to agriculture. India imported $3.7 billion worth of fertilisers from the region last year, including substantial volumes of urea and NPK complexes. Iran and other Gulf producers account for a major share of global urea exports. With Qatar’s LNG supplies already curtailed due to regional attacks, three Indian urea plants have slashed production, tightening domestic availability.

Global urea prices have surged $50–80 per tonne in just days. For Indian farmers, already grappling with subsidy strains, this means higher input costs that will translate into elevated food prices — especially for staples like rice and wheat. Experts say a sustained disruption could force the government to spend an extra ₹30,000–50,000 crore on fertiliser subsidies, squeezing fiscal space and pushing retail inflation higher.

Petrochemical plants, paints, tyres, synthetic textiles and flexible packaging industries rely on naphtha and other oil-linked feedstocks, as well as LNG-derived inputs. With naphtha and related chemical prices climbing alongside Brent crude, domestic producers are already passing on 10–20% cost increases in some segments.

Specialty chemical makers with Middle East supply chains are particularly vulnerable. Emkay Global notes that limited inventories could lead to sharp price spikes in methanol, styrene, PVC and linear alkyl benzene (LAB) — raw materials that feed into detergents, plastics and consumer goods. The result: costlier packaging, tyres and household products on supermarket shelves.

Petroleum coke — a refinery byproduct used as fuel in cement kilns, aluminium smelters and power plants — saw India import $1.3 billion worth from West Asia last year (37% of total needs). Any shortage will raise production costs in these energy-intensive sectors.

Cement prices, already under pressure from infrastructure demand, could climb further, delaying road and housing projects. Aluminium producers face similar headwinds, with knock-on effects for auto parts, packaging and electrical equipment.

India’s $20+ billion diamond polishing industry sources rough stones and relies on West Asian trade routes. Supply shocks and surging freight/insurance costs are already disrupting operations and export competitiveness.

Even non-energy exports are feeling the pinch. Over 400,000 metric tonnes of basmati rice are stuck at ports or in transit due to rerouted shipping and higher war-risk premiums (up 40–60% on some routes). Tyres, ceramics and other manufactured goods face similar logistics cost surges.

Air freight costs from Asia to Europe have jumped 45% since the conflict intensified, adding to overall supply-chain expenses. Higher energy and logistics costs will feed into transport, power and manufacturing across the board — amplifying retail inflation by an estimated 20–35 basis points for every $10 rise in oil, according to brokerages.

The Gulf also supplies 38% of India’s remittances and hosts millions of Indian workers; any escalation could threaten those inflows, further pressuring the current account.

Rating agencies like Moody’s and Crisil have flagged India as among the most exposed large economies. While refiners are scrambling for alternative crude from Russia, the US and West Africa, non-oil supply chains lack quick substitutes. GTRI founder Ajay Srivastava warned: “Any prolonged disruption could cascade across multiple sectors, from energy and agriculture to manufacturing and exports.”