# Middle East crisis threatens Indian economy, says ORF report

2026-08-20T16:11:50+00:00 | Business & Economy | Indian Opinion Desk

Corroboration: 1 independent outlet

Disruption at the Strait of Hormuz, a key maritime chokepoint for global oil, LNG, and fertiliser trade, is creating structural challenges for the Indian economy, according to a special report by the Observer Research Foundation (ORF). The report says the crisis has raised energy prices, freight costs, and war-risk insurance premiums, directly affecting India's import bill, inflation, public finances, and industrial competitiveness. The impact is being felt across multiple sectors, including aviation, power, transport, petrochemicals, textiles, ceramics, metals, cement, and gems and jewellery. Micro, small and medium enterprises (MSMEs), lower-income households, and farmers are facing disproportionate strain, the report notes. Higher natural gas prices have also hit urea production and petrochemical derivatives, with wider effects on agriculture and manufacturing. The report traces how the energy shock is transmitted from commodity sectors like oil and LNG to service sectors and households. It identifies specific vulnerabilities and examines policy levers to address exposure to the conflict. The report warns that continued instability could deepen the strain on India's macroeconomic stability and sectoral growth.

## Indian Opinion Analysis

India imports about 85% of its crude oil and over 50% of its natural gas, much of it passing through the Strait of Hormuz. The present crisis echoes the 1990 Gulf War spike in oil prices, but with India's energy dependence now far higher. The ripple effects on fertiliser costs are particularly worrying: India subsidises urea heavily, so a price surge could balloon the fiscal deficit or force higher retail food prices. The RBI's next monetary policy committee meeting in August will watch inflation data closely for signs of pass-through from energy costs.

## Coverage

- orfme.org <https://orfme.org/research/from-hormuz-to-households-the-impacts-of-the-middle-east-crisis-on-the-indian-economy/>
  The ORF report is presented as a straightforward analytical assessment of the crisis's economic impacts, without overt political framing or advocacy.

This story was synthesised by AI from the source linked above.

Tags: energy prices, India economy, Middle East crisis, Observer Research Foundation, Strait of Hormuz
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