Renewed Iran-Israel conflict threatens Red Sea shipping route recovery, impact India trade

Just as global shipping lines and traders had started to breathe a sigh of relief from elevated freight rates, with vessels returning to the crucial Red Sea route from the longer Cape of Good Hope passage, a conflict between two major West Asian powers — Iran and Israel —has reignited fears of surging oil prices and more trade disruptions.

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The escalating tensions between Iran and Israel are also sending shockwaves through global stock markets, with India’s benchmark Sensex closing 573 points lower on Friday.

Signs of a sustained escalation emerged after Israeli Prime Minister Benjamin Netanyahu said strikes targeting military and nuclear sites across Iran would continue “for as many days as it takes”. This follows Israeli airstrikes that killed at least three senior Iranian military officers, including Hossein Salami, head of Iran’s elite Revolutionary Guard. In response, Iran termed the attacks a “declaration of war” and launched around 100 drones towards Israel in the early hours of June 13, many of which were intercepted, according to Israeli authorities.