Heightened tensions between Israel and Iran have led to an array of missile and drone attacks, with the main focus being energy facilities and civilian regions. The escalating conflict, which began on Friday (June 13), has resulted in over 220 casualties and continues to mount significant concern for global politics. The growing possibility of a full-scale war between the two countries is alarming, as world leaders strive to prevent a major clash in this already destabilized region. The current crisis has now extended into the fourth day, with Iran affirming that Israeli offensive action has caused substantial casualties.
Such rising hostilities between Israel and Iran have caught India’s attention due to the possible serious consequences that may ensue. Considering the geopolitical and economic influence, an outright war could impact various sectors, from commerce to financial markets in New Delhi. Let’s explore the potential repercussions of an Israel-Iran conflict on India’s interests detailed below.
The skirmish between Israel and Iran took a fresh turn on Monday, as Israel launched a series of attacks aimed at Iranian missile hubs following Tehran’s lethal strikes. The conflict’s geographical sweep has stretched as far as Mashhad in Iran’s far east, a substantial distance of approximately 2,300 kilometers from Israel. Recent confirmations from Iran indicate that there have been pronounced military losses, with three of its top-ranking officials, including the Revolutionary Guard Intelligence Chief, General Mohammad Kazemi, having been claimed by the ongoing violence.
Concurrent reports suggest that Tehran has made strikes on Tel Aviv and the port city of Haifa in response. The UK’s maritime security firm Ambrey has reported witnessing fires at a power plant near Haifa. They have attested to viewing video footage of the Israeli military intercepting the attack, followed by the impacts of two hypersonic missiles.
If Israel and Iran were to plunge into a full-scale war, the effects on India could be widespread. Preliminary signs of these potential outcomes became clear when the Indian stock market indicator, Sensex, suffered a significant drop, closing 573 points lower right after the conflict started. More importantly, the safety of considerable Indian populations in both Israel and Iran is currently in jeopardy.
The risk to Indian citizens is genuine – there are currently an estimated 18,000 to 20,000 Indians in Israel, ranging from students to workers, besides about 85,000 Jews of Indian descent. Official records show that as of March 10, 2025, nearly 6,694 Indian workers made their way to Israel. Roughly 10,765 Indians, spanning across a wide range of professions, are residing in Iran as per the Ministry of External Affairs.
As the situation unfolds, the Indian embassy in Israel reassures that there are no immediate threats to Indians, with constant monitoring taking place. Setting up a round-the-clock helpline, the embassy maintains regular touch with Indians ensuring community support. However, the circumstances continue to be dangerously unstable in Iran, making evacuations risky. The Indian embassy is hence coordinating with Indian students to secure their safety while facilitating relocation to safer zones within Iran where necessary.
Aside from the human toll, the escalating conflict could also heavily impact global oil prices. Initial signs are already visible in the oil market’s response to these developments. For instance, crude oil prices rose earlier this week as the two warring countries targeted each other’s critical energy facilities. As of Monday (June 16), Brent crude’s August contract in the Intercontinental Exchange noted a 1.24% increase from its last closing, trading at $75.14 per barrel.
While India does not directly import oil from Iran due to US sanctions, tensions in the Strait of Hormuz, located between Iran and the Arabian Peninsula, would likely cause significant concerns. This particular region witnesses the transportation of roughly 20% of the global oil supply. Any disruption to the Strait of Hormuz could directly impact oil shipments from key producers such as Iraq, Saudi Arabia, and the UAE, countries that serve as significant suppliers for India.
Potential hazards to trade routes add to the concern. A major clash between Israel and Iran could disrupt India’s export mechanisms since many believe cargo vessels will resort to using the Cape of Good Hope route instead of the essential Red Sea route, leading to increased time and operational costs. A past crisis in the Red Sea due to vessel attacks raised shipping expenses and extended voyage spans, resulting in freight rate inflation.
India’s trade isn’t the only sector facing challenges. It maintains considerable trading relationships with both Israel and Iran, accounting for a cumulative value of about $5 billion. Such trade ties stand at stake in the event of an outright war between the two countries.
The prevalent hostilities could also throw the global aviation industry into disarray, which includes India. Due to changing airspace conditions over Iran, Iraq, and nearby regions, many flight schedules have been affected. These diversions could lead to longer flight durations, potential delays, and an uptick in fuel costs for carriers operating in West Asia and beyond. Indian national carrier Air India has also reported alterations to a number of its flight routes due to this situation.
Expert opinions suggest that the ongoing conflict might not cause significant economic damage to India as long as it doesn’t balloon into a broader regional war. Indian’s strong macroeconomic base is believed to buffer against a possible global crisis. Echoing these sentiments, banking and market expert Ajay Bagga, projected that, akin to the transient impact of the Gaza conflict, the market will absorb the current Israel-Iran crisis and move on, emphasizing that the risk of a larger regional conflict is receding.
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