IMPACTOF WAR, ENERGY SECURITY AND GLOBAL ECONOMY

 ISRAEL US  IRAN WAR 

Despite Iran's reported commitment not to make a nuclear bomb or stockpile nuclear material as promised in the mediating discussion between US and Iran held on 27th February under Omani mediation , the very next day USA and Israel ,conducted  about 2000 strikes on Iranian targets  destroying military infrastructure, naval vessels, missile systems and command centers and  killing Iran's Supreme leader Ayatollah Ali Khamenei and dozens of senior Iranian officials.Consequently Iran started vengeance by striking on Israel and US Gulf allies through waves of missiles and drones hitting US embassies and military bases in  Saudi Arabia and Aramco Kuwait,Lebanon,UAE and Bhurj Khalifa and even mediator Oman  base was not spared.The escalation of conflict between Iran and Israel, involving US military actions significantly disrupted global oil supply chain.According to Donald Trump the heavy and pinpoint  bombing compaign would continue throughout the week or as long as necessary to achieve our objective of PEACE THROUGHOUT THE MIDDLE EAST AND INDEED THE WORLD ".According to Trump US attacks on Iran are projected to last 4 or 5 weeks but could go longer and added that this was our last best chance to strike.He outlined 4 goals for the war- 1.destroying Iran's missile capabilities; 2.Sinking its Navy.3.ensuring it never obtain a nuclear weapon, and 4.stopping it from arming and funding proxy militias in the  region.Israeli troops operating in Southern Lebanon intensified strikes on Hezbollah,in turn Hezbollah launched missile attacks against the  "criminal Israel aggression ". The US submarine sank an Iranian Warship off the  coast of Srilanka with 180 persons on board and at least 87 feared dead.

IMPACT ON ENERGY SUPPLIES 

The Strait of Hormuz is the critical point through which about 20 million barrels of crude oil per day are shipped accounting for one fifth of the global liquid oil consumption. Passage of oil tanker ships are blocked by Iran's Revolutionary Guards where they have declared the strait as unsafe threatening to target any ship attempting to transit ,and also  have vowed to retaliate  against all regional energy infrastructure centers. For the oil rich nations of the Gulf region most oil exports from the Gulf  would be cut off.Evenif Saudi Arabia and UAE pushed their alternate pipelines to  experts observed  that about two thirds of Gulf  exports would likely to be stuck including LNG. It has been observed that estimated 50-55% of India's crude oil and LNG  imports came ⁶ through Straight of Hormuz making India more vulnerable Initially reports uggested that India was having sufficient stock of oil LNG to meet requirements of 28 days.But some report suggest that India's strategic petroleum reserves  currently cover only around 9 days of demand and there are no comparable strategic reserves of natural gas, and if disruptions persist beyond short term supply  side stress could intensify further.  Both China and India import millions of barrels of crude through  strait .While China recieved around 5.4 million  barrels of crude oil India is estimated to recieve2.1 millions daily.Eventhough oil flows are not halted completely prices of crude increased by 5% on March 3rd 2026.Iran is  considered as a major oil producer with about 3.1 million barrels per day with  cheaper cost of production of just$ 10 per barrel day  capable of making maximum profit. About 80% of Iran's oil exports are consumed by China.However US sanctions against Iran restricted its export options ,through paralization of tanker traffic through key water ways and drone attacks on critical energy facilities.On the other hand  Gulf countries like Saudi Arabia,UAE ,Qatar  Oman etc are acutely impinged by the ongoing middle East conflict risk in  energy industry resulting in acute disruptions of energy supplies capable of adversely affecting global economy. According to Edward Fishman Senior Fellow on Foreign Relations " Significant and prolonged disruption of traffic through the Strait of Hormuz vital maritime choke point in the world which carry one in five barrels of oil every day could take oil prices even above $100 per barrel. Another scenario is less damaging if there is not full closure of the Strait the oil price  is likely to be $80 Per barrel. Obviously sharply higher global oil prices could inflict inflation and low GDP in general  and macro economic fundamentals in particular

  IMPACT ON THE ECONOMY 

Israel Iran war is significantly disrupting global trade with immediate impact on energy markets, shipping and aviation sectors. Apart from impacting  global oil and and gas supplies about 20- 30% ,the conflict has damaged key enegy infrastructure,including Iran's South Pars Gas field  and disrupted  shipping lanes in the Persian Gulf leading to reduced tanker traffic and increased insurance and shipping costs. On the other hand in aviation sector Middle East Airspace closure disrupted flights after US  Israel strikes Iran triggering cancelations, evacuations and rising fares across global routes.As of March 4 2026 Indian Airlines are operating 58 flights to key Gulf destinations including 30 by IndiGo 23 Air India and  Air India express,However as situation remains fluid passengers are advised to check the latest flight status directly with respective air lines. As the escalation followed after the killing of Iran's Supreme Leader Ayatollah Ali Khamenei retaliatory attacks on Israel and US military targets in different Gulf nations and energy infrastructure  were made.

It may be noted that India's trade exposure to west Asia is very significant because between April and December 2025 India exported $ 50 billion to 13 countries estimated to be 15% of total outbound shipments. On the otherhand our imports from the region stood $116.45 billion during the same period. Persian Gulf region this  narrow passage is the only route that connects the Gulf to the Arabian seThe ongoing war, repeated shelling and drone strikes and Israel's views on Iran's nuclear programme are exisential threat and already  Israel  started attacking it since 2024  which are bound to create hazardous humanitarian and environmental challenges. Nearly estimated one crore Indian diaspora well knit to the culture of Gulf countries sending lions share of global remittances to the home country, providing markets to Indian goods and services are looking forward to restore normalcy in the region and let us hope that good sense will prevail and mind set of global leaders become rational and humanitarian. 

In short the  persistence of Israel US Iran war beyond short period are bound to adversely impact global economy in terms of supply chain disruptions, energy crisis,rising prices, slow down in GDP, falling workers remittances and repatriation of  diaspora if conditions and  law and order situation worsens