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Iran–Israel–US Conflict Impact on India’s Economy & Energy

Iran–Israel–US conflict impact on India threatens oil imports, Strait of Hormuz trade routes, inflation, and the country’s clean energy transition goals.

Dipin Damodharan

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The Iran–Israel–US conflict impact on India covers oil imports through the Strait of Hormuz, trade disruptions, rising crude prices, inflation risks, and clean energy transition challenges.
The Iran–Israel–US conflict impact on India covers oil imports through the Strait of Hormuz, trade disruptions, rising crude prices, inflation risks, and clean energy transition challenges. Image credit: Zifeng Xiong/Pexels

Iran–Israel–US conflict impact on India could raise crude prices, disrupt trade, widen the current account deficit, and pressure energy security.

The tremors began far from India’s shores. US and Israeli strikes on Iran, followed by retaliatory actions, have redrawn fault lines across West Asia. But in New Delhi, in oil refineries along the western coast, and in rice mandis across Haryana and Punjab, the aftershocks are already being felt.

“US and Israel attacks on Iran, and subsequent counter attacks have exposed a new wave of geopolitical risks,” notes a policy briefing from Climate Trends, reviewed by EdPublica. For India — bound to Israel by strategic ties and to Iran by history and geography — the moment is fraught with complexity.

At the heart of the unfolding crisis lies a narrow maritime artery: the Strait of Hormuz.

The Strait of Hormuz: India’s Energy Lifeline

Nearly a quarter of the world’s crude oil flows through the Strait of Hormuz — a chokepoint linking West Asian producers to global markets. For South Asia, the dependency is sharper. Around 40% of the total crude oil consumption of India, China, Japan and South Korea transits this passage.

India imports nearly 90% of its crude oil. Of its daily imports, 2.5–2.7 million barrels per day — largely from Kuwait, Saudi Arabia, Iraq and the UAE — pass through these contested waters.

The risks are no longer theoretical. According to reports, Iran has been relaying warnings over VHF radio to ships, cautioning that passage may not be guaranteed. Insurance pricing for shipping has risen by 50% overnight. Freight rates are climbing. The Director General of Shipping has issued a circular advising stakeholders not to deploy Indian crews in Iran.

Map view of the Strait of Hormuz showing major oil shipping lanes, illustrating the Iran–Israel–US conflict impact on India’s energy imports and trade routes.
Image credit:Jacques Descloitres, MODIS Land Rapid Response Team, NASA/GSFC

If Iran’s 3.3 million barrels per day production is disrupted, oil prices could rise 9–15%, pushing crude from a base of $70 per barrel to roughly $76–81.

For India, the impact would be “more price driven and not volume driven”. Yet price shocks ripple quickly — widening the current account deficit, weakening the rupee and feeding domestic inflation.

Vivek Y. Kelkar, researcher working at the intersection of geo-economics and sustainability, warns: “Much depends on how long the conflict endures and whether risks to the Persian Gulf and the Strait of Hormuz persist… For India, the impact would be indirect but significant. With nearly 90 percent import dependence, every $10 per barrel rise increases the annual import bill by about $13–14 billion, widening the current account deficit, pressuring the rupee and adding to inflation.”

He adds that China — which buys roughly 90% of Iran’s crude exports — could pivot more aggressively toward Russian, Iraqi, Saudi and West African grades if Iranian volumes shrink. “If Beijing pivots toward the same Russian or Atlantic Basin supplies that India relies on for diversification, India’s energy security could become more expensive and more contested. The likely outcome is not deep scarcity, but tighter global balances, higher prices and diminished negotiating leverage for Indian refiners.”

From Oil Tanks to Rice Fields

The consequences extend well beyond petrol pumps.

In the weeks before the conflict escalated, Iranian importers had placed large orders for basmati rice, pushing local prices up by about Rs 10 per kg. Iran accounts for roughly 25% of India’s basmati exports; Iraq another 20%. Together, that’s over 2 million tonnes valued at more than $2 billion annually.

Uncertainty now looms over these trade flows. Tea exports too may take a hit — nearly Rs 7 billion worth was exported to Iran in 2024–25.

More broadly, Middle Eastern countries including Iran, Bahrain, Kuwait, Qatar and the UAE account for bilateral trade worth about $117.32 billion, with the UAE alone contributing nearly $100 billion. Any regional escalation directly threatens these ties.

The UAE Factor: A Stable Hub Under Strain

Dubai has long been viewed as West Asia’s insulated commercial gateway — a financial and logistics hub even when politics elsewhere burned. But the conflict “fundamentally alters Dubai’s longstanding reputation as a politically insulated financial and trade hub”. India and the UAE have been expanding cooperation in renewables, green hydrogen and critical minerals. The India–UAE Comprehensive Economic Partnership Agreement (CEPA), signed in 2022, marked India’s first such accord in the MENA region. Escalation now risks slowing joint ventures and technology exchanges just as clean transition investments were gathering pace.

“India’s policy of strategic autonomy has so far helped it navigate the choppy waters of geopolitics but the balancing act has become increasingly tough. The conflict in west Asia and its repercussions raise the risks to its supply chains, test energy security and increase insurance costs and fuel inflation if energy prices remain elevated, as is expected if the Strait of Hormuz is blocked… Yet, despite the rising risks India’s economy and markets are relatively better placed to ride this geopolitical storm,” Archana Chaudhary, Associate Director at Climate Trends, notes.

A Clean Energy Imperative, Not Just a Climate Goal

The crisis may also sharpen India’s clean energy calculus. Elevated oil costs increase dollar demand, typically putting downward pressure on the rupee. Costlier fuel filters into transportation, logistics and eventually food prices. Renewable energy supply chains — including critical minerals — could also be disrupted, as significant shipping traffic flows through Hormuz

Yet analysts see opportunity in the turbulence. “The recent strikes only reinforce the validity of India’s long-standing principle of strategic autonomy. In an increasingly volatile West Asian landscape, the wisdom of accelerating our clean energy ambitions becomes even more apparent for energy security. Reducing dependence on imported conventional energy sources, i.e. oil and gas, through rapid deployment of clean technologies is no longer just a climate imperative but a strategic necessity… In this fractured geopolitical order, India must deepen the momentum toward clean energy transition and technological self-reliance to insulate its growth trajectory from external shocks,” Aarti Khosla, Director, Climate Trends, argues.

Vaibhav Chaturvedi, Senior Fellow at CEEW, echoes the urgency: “The US-Iran war doesn’t bode well for the global energy economy. In the short run, we can expect an increase in oil prices. In the medium term, if the war drags, there would be a negative impact on the global economy. The event will undoubtedly create headwinds for India’s economy. India will do well to leverage its relationships to access cheaper oil in this scenario. This is a moment to bring investments to ramp up plans to scale up electrification of the power and transport sector faster as the ultimate solution to energy security.”

Duttatreya Das, Energy Analyst–Asia at Ember, calls this a turning point: “The past few months have been challenging for India’s crude supplies—first the shift away from discounted Russian Urals to avoid U.S. tariffs, and now the potential volume impact from disruptions in West Asia. While these disruptions may be short-term, India cannot simply afford to remain hostage to geopolitical volatility… Moments like these offer an opportunity to recalibrate its mobility policy, through electrification and a faster expansion of ethanol blending in the near term.”

A Moment of Strategic Testing

In South Block, a Cabinet meeting chaired by the Prime Minister signals the seriousness of the moment. OPEC has indicated it may adjust production to maintain market stability. India’s long-held doctrine of strategic autonomy — balancing relationships across rival blocs — is now under stress. After US pressure restricted purchases of Russian oil, India diversified more toward Gulf suppliers, inadvertently deepening its exposure to Hormuz-linked risks. Though it imports from over 40 countries, geography and geopolitics cannot be entirely diversified away.

The immediate reality is uncertainty: higher freight, rising insurance, volatile crude, jittery exporters.

The longer-term question is whether this crisis accelerates a structural pivot. In the shadows of tankers and warships, India’s energy transition debate is no longer abstract. It is entangled with inflation, trade, currency stability and food security.

As oil flows through a narrow strait watched by rival navies, India’s policymakers face a widening strategic horizon — where climate ambition, economic resilience and geopolitical balancing are no longer separate conversations, but one.

Dipin Damodharan is the Co-founder and Editor-in-Chief of EdPublica. A journalist and editor with over 15 years of experience leading and co-founding both print and digital media outlets, he has written extensively on education, politics, and culture. His work has appeared in global publications such as The Huffington Post, The Himalayan Times, DailyO, Education Insider, and others.

Sustainable Energy

India’s Power Grid Gets Greener: Green Energy Break a New Record

India’s solar and wind energy crossed the 100 GW mark for the first time, supplying nearly half of the country’s electricity at one point. The milestone highlights the growing role of renewables in meeting India’s rising power demand—and the storage challenges that could shape the next phase of the energy transition.

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Solar panels and wind turbines generating renewable energy at sunset, representing India's growing solar and wind power capacity.
A solar farm and wind turbines generate clean electricity, reflecting the growing role of solar and wind energy in India's power grid. Representational image. Image credit: Kenueone/Pixabay

As India grappled with another summer of soaring electricity demand, the country’s power grid quietly reached a milestone. For the first time, solar and wind together generated more than 100 gigawatts (GW) of electricity, supplying nearly half of the country’s power at one point.

According to Grid Controller of India Ltd. (GRID-INDIA), utility-scale solar and wind generation reached 103.7 GW at 12.05 pm on July 13, the highest recorded so far. A few minutes later, the two sources supplied 42.79% of the electricity flowing through the national grid. The following day, generation crossed the 100 GW mark again, showing that the achievement was not a one-off event.

The record comes at a time when rainfall has been lower than usual. According to the India Meteorological Department (IMD), the southwest monsoon is expected to bring about 90% of the country’s normal rainfall this year. With lower inflows into reservoirs, hydropower generation can come under pressure, making solar and wind even more important in meeting electricity demand.

The achievement signals a broader shift. Renewable energy is no longer just expanding on paper through new projects—it is increasingly helping power homes, businesses and industries during periods of high demand.

Solar and Wind Energy: India’s Growing Demand for Electricity

India’s appetite for electricity continues to grow.

According to Power Minister Manohar Lal, the country’s peak electricity demand has already reached about 271 GW this year. The government expects it to touch around 300 GW by 2027, driven by rising use of air conditioners, electric vehicles, data centres and industrial activity.

Meeting that demand has traditionally meant relying on coal-fired power plants. This year, however, solar and wind energy has played a larger role. According to GRID-INDIA, solar generation reached a record 81 GW during the April heatwave, helping ease pressure on conventional power plants during the middle of the day.

The International Energy Agency (IEA) expects India to remain one of the world’s fastest-growing renewable energy markets through the rest of the decade. But it also warns that investment in electricity grids and storage must grow alongside renewable energy.

Solar and wind energy in India
Rooftop solar panels installed on a residential home, highlighting the growing adoption of distributed solar energy to meet household electricity needs and support India’s clean energy transition. Representational image. Image credit: AS Photography/Pixabay

The Challenge Begins After Sunset

The July record was achieved around noon, when solar panels generate their highest output. Electricity demand, however, often remains high long after sunset.

That is why many experts say the next phase of India’s clean energy transition will depend less on building more solar parks and more on storing the electricity they generate.

“The achievement shows the national grid can absorb much larger volumes of renewable electricity than before. The next priority is expanding energy storage so surplus solar power generated during the day can be supplied after sunset,” said Shreya Jai, Energy Lead at Climate Trends.

Solar Energy and Storage Challenges

Research points in the same direction. A recent study by researchers from the University of California, Berkeley, the India Energy and Climate Center and partner institutions found that expanding battery storage and making the grid more flexible would allow India to integrate much larger shares of solar and wind while maintaining a reliable electricity supply.

Disha Aggarwal, Fellow at the Council on Energy, Environment and Water (CEEW), said the milestone shows renewable energy is becoming a larger part of the country’s actual electricity supply, rather than just its installed capacity. She said the next priority should be scaling up energy storage, strengthening reserve capacity and creating electricity markets that can better support evening demand.

Storing renewable energy, however, remains one of India’s biggest challenges. Battery systems are still expensive, while pumped hydro projects require suitable terrain, long construction periods and multiple regulatory clearances. Expanding transmission networks to carry renewable power from generation centres to demand hubs is another hurdle.

Crossing the 100 GW mark shows that India can generate renewable electricity at an unprecedented scale. The bigger challenge now is ensuring that clean power generated during the day can be stored and delivered when homes, hospitals and industries need it most.

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Sustainable Energy

Could This Molecular Sponge Change Nuclear Wastewater Forever?

Tritium has long resisted conventional wastewater treatment because it behaves almost exactly like ordinary water. Researchers now say a “molecular sponge” may finally make separating the radioactive isotope faster and more efficient.

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Tritium
A conceptual illustration showing tritium, a radioactive isotope of hydrogen, and its atomic interactions. Tritium's similarity to ordinary hydrogen makes it difficult to separate from water during nuclear wastewater treatment. Image credit: Aprott/iStock

For decades, tritium has remained the one radioactive contaminant that nuclear engineers could not efficiently remove from wastewater. Unlike other radioactive elements, tritium becomes part of the water molecule itself, making it nearly impossible to separate using conventional treatment methods. Instead, facilities have relied on energy-intensive distillation or, in some cases, the controlled dilution and release of treated water that still contains tritium within regulatory safety limits.

Now, researchers in China report a possible solution. In a study published in Environmental Science & Technology, they developed a metal-organic framework (MOF)-coated material that significantly improves tritium separation during distillation. This study builds on work that won the Nobel Prize in Chemistry last year. If the technology performs similarly outside the laboratory, it could make treating radioactive wastewater far more efficient.

tritium
Image credit: Environ. Sci. Technol. 2026

The problem Hidden Inside a Water Molecule

Most radioactive contaminants can be removed using filters or chemical treatment. Tritium is different because it replaces one of the hydrogen atoms in the water molecule itself. That means the contaminated water looks and behaves almost exactly like clean water.

For decades, the only practical way to separate the two has been distillation. Since tritiated water boils at a slightly different temperature, the process eventually works. But the difference is so tiny that it requires enormous distillation towers and a great deal of energy.

The difficulty came into public focus in 2023 when Japan began releasing treated wastewater from the Fukushima Daiichi nuclear power plant into the Pacific Ocean. Although most radioactive substances had been removed, tritium remained because no practical technology existed to separate it at such a large scale. Instead, the water was diluted before being released under international safety standards.

A Sponge at the Molecular Level

Inside every distillation tower are materials called packings, which create surfaces where water vapour and liquid interact. Traditionally, these packings simply help the process along. The researchers turned them into active participants.

They coated a stainless-steel mesh with a metal-organic framework (MOF) called NH₂-MIL-101(Cr). MOFs are often described as molecular sponges because they contain countless microscopic pores packed into a tiny space. But this sponge does more than hold water. Its chemical structure encourages tritium atoms to exchange places with ordinary hydrogen atoms, making them easier to separate during distillation.

In laboratory tests, the material achieved a separation efficiency of 42.5 theoretical plates per metre, the highest reported for this type of distillation system. The team estimates that a 10-metre distillation column fitted with the new material could outperform the best previously reported packing by 134 times. Compared with the commercial packing materials used today, its overall separation performance could be up to one million times greater under similar industrial conditions.

Those figures still need to be validated outside the laboratory, but they suggest that future treatment systems may no longer need the massive, energy-hungry towers used today.

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Sustainable Energy

India Becomes World’s Fourth-Largest LNG Import Hub as Gas Infrastructure Grows

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LNG import terminal with large liquefied natural gas storage tanks and an LNG carrier docked at a coastal port.
LNG regasification terminal with storage tanks and an LNG carrier, illustrating infrastructure used to import and process liquefied natural gas. Representational image. Image credit: Diego F Parra/Pexels

India has become the world’s fourth-largest market for liquefied natural gas (LNG) regasification capacity after expanding its import infrastructure in 2025, according to the International Gas Union’s (IGU) World LNG Report 2026.

The report says India’s total LNG regasification capacity reached 52.5 million tonnes per annum (mtpa) by the end of 2025, after adding 7.1 mtpa during the year. The increase helped India overtake Spain in global rankings.

The additional capacity came from two projects: the 5 mtpa Chhara LNG terminal in Gujarat and the completion of a breakwater at the Dabhol LNG terminal in Maharashtra, which added 2.1 mtpa by allowing the terminal to operate throughout the year.

LNG is natural gas that is cooled into a liquid so it can be transported by ship. Once it reaches India, it is converted back into gas at regasification terminals and supplied to industries, fertiliser plants, refineries and city gas networks.

Supporting India’s growing energy needs

India’s demand for energy is rising as industries expand and cities grow. Since domestic natural gas production is not enough to meet demand, the country imports a large share of its gas as LNG.

More regasification capacity means India can import larger volumes of LNG from different countries, improving energy security and reducing the risk of supply disruptions. It also gives industries access to a more reliable fuel supply.

The IGU report notes that global LNG trade reached a record 436.98 million tonnes in 2025, with Asia remaining the largest market for LNG.

India has also been working towards increasing the share of natural gas in its energy mix from around 6% to 15%. The government sees natural gas as a fuel that can help reduce dependence on coal while supporting sectors where cleaner alternatives are still developing.

A transition fuel with challenges

Although natural gas burns cleaner than coal, it is still a fossil fuel. Many experts describe it as a transition fuel because it can help lower emissions in the short term while renewable energy continues to expand.

However, natural gas also has environmental concerns. Methane, the main component of natural gas, is a powerful greenhouse gas, and leaks during production and transport can reduce its climate benefits.

India is therefore following a dual approach: expanding gas infrastructure to meet current energy needs while continuing to invest in solar, wind, green hydrogen and battery storage to achieve its long-term climate goals.

The IGU report shows that India’s latest investments are aimed at balancing energy security, economic growth and the transition to cleaner energy, even as the country continues to expand its renewable energy capacity.

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