IRAN WAR: HOW LONG WILL THE PAIN LINGER?

The echoes of this conflict will haunt the Indian and global economies long after the final missile is fired

- N. Madhavan

A large explosion and fire.

Early February, India Inc heaved a sigh of relief. The US trade deal was finalized and tariffs fell. Industry leaders, who had spent most of 2025 battling trade disruption, hoped that 2026 will herald a new beginning. But by the end of the month, they were facing a disruption again—far severe than what the tariffs had caused.

On 28 February, Trump did what all his predecessors hesitated to do—attack Iran. The West Asian nation, weakened considerably in recent months due to military setbacks and popular uprising among its people unhappy with their economic condition, did not collapse as Trump had expected. It not only fired missiles and drones at Israel and other Arab neighbours, but also did something it has never done before. It effectively closed the Strait of Hormuz, a crucial sea lane that carries about 15% of global oil and 20% of the gas demand. On an average, 138 vessels pass through this passageway that connects the Persian Gulf to the Arabian Sea every day carrying 14 million barrels of crude and 290 million cubic metres of liquified natural gas (LNG). Very few have passed through it in the last 12 days. Oil and gas prices have consequently shot up.

Far worse is the supply chain disruption it causes not just to oil and gas, but to all the downstream products. This is hurting industries far and wide, forcing governments across the world to intervene and ration energy products.