Escalation between Iran, Israel may threaten India’s energy security

Overnight into June 13, Israel kicked off Operation Rising Lion aimed against Iran’s nuclear program. Iran retaliated in less than 24 hours.

Israel and Iran exchanged strikes again on June 14 and in the early hours of June 15. Both parties reported casualties and damage, and admitted that a number of facilities had been hit, but said the damage was minor.

Due to this war, India may face some collateral economic fallout on energy security, trade routes and commercial interests uncertainty amid the escalating conflict between Israel and Iran, according to the Global Trade Research Initiative (GTRI).

The escalating hostilities and rising regional tensions directly effect the India’s strategic and economic routes to West Asia.

India has strong trade ties both with Tehran and Tel Aviv. In 2024-2025, Indian exports to Iran totalled INR 10550 Crores while imports amounted to over INR 375000 Crores. Export to Israel from India reached INR 18275 Crores in the same period, while deliveries from the country to the 3rd largest Economy of the World exceeded INR 13600 Crores.

Instability around the Strait of Hormuz, with nearly two-thirds of Indian crude oil and half of its LNG imports passing through it, is the key risk for India. Any closure or military disruption in the Strait of Hormuz would sharply increase oil prices, shipping costs, and insurance premiums – triggering inflation, pressuring the rupee, and complicating India’s fiscal management.

In this respect, the Indian government must urgently review energy risk scenarios, diversify crude sourcing, and ensure strategic reserves are sufficient. The Indian Navy has the capability to ensure that no country whatsoever is able to threaten, within the Indian Ocean, any ship flying the Indian flag.