Iran’s state media said on February 28 that the Islamic Republic has shut the Strait of Hormuz – one of the world’s most critical energy chokepoints through which about a fifth of global oil and gas supplies transit – in response to US and Israeli missile strikes.
“We would estimate that near-term rate increases for marine hull insurance in the Gulf could range from 25 percent to 50 percent,” said Dylan Mortimer at insurance broker Marsh.
New Delhi:The Commerce Ministry has convened a meeting of exporters, shipping lines, freight forwarders and officials from other ministries on Monday to assess the impact of escalating tensions in the Middle East region on India’s trade.
The US and Israel jointly launched military strikes on Iran on Saturday. Iran responded by firing drones and missiles at Israel and US military installations around the Gulf, and also at the global business hub of Dubai.
The ministry has called the meeting in a hybrid mode to assess the impact of the evolving situation on India’s trade, the official said.
Exporters have expressed serious concerns that the war will affect trade routes through the Strait of Hormuz and the Bab el-Mandeb Strait. Both are key for movement of ships. It connects India to the Gulf region, North America and Europe.
Iran’s state media said on February 28 that the Islamic Republic has shut the Strait of Hormuz – one of the world’s most critical energy chokepoints through which about a fifth of global oil and gas supplies transit – in response to US and Israeli missile strikes.
India imports almost all of its LPG through the Strait of Hormuz. Any disruption or restriction at this chokepoint would immediately pressure LPG flows.
“Indian refineries put together hold anywhere between 10 to 15 days of crude inventories, both in tanks and in transit. Besides, all their fuel tanks are full, which can easily meet 7-10 days of the country’s fuel requirement.For now, we think the closure of the Strait of Hormuz will not be very long,” an official said.
Islamic Revolutionary Guards Corps (IRGC), which controls the sea lane, has in messages in high frequency warned that no ships are allowed to pass through the Strait, but has so far not attacked any of them.
“India’s recent pivot back toward Middle Eastern crude has increased its near-term exposure to Hormuz-linked risks. Escalation would most immediately manifest through higher prices, freight and insurance costs and also at last outright supply shock (as of now, the probability of supply/production reduction is low),” said Sumit Ritolia, Lead Research Analyst, Refining and Modelling at commodity market analytic firm Kpler.
He went on to state that while temporary disruptions cannot be ruled out, a prolonged full blockade remains a low probability.
There was an expectation that war risk insurance rates would surge when underwriters reviewed cover on Monday, maritime sources said.
War risk cover is required when sailing into perilous areas and the Lloyd’s of London market has already listed Iran, the Gulf and parts of the Gulf of Oman as high-risk.
“We would estimate that near-term rate increases for marine hull insurance in the Gulf could range from 25 percent to 50 percent,” said Dylan Mortimer at insurance broker Marsh.
Maersk, the world’s biggest container shipping company, said on Sunday it was halting passage through the Strait of Hormuz for “safety” reasons.
“We are suspending all vessel crossings in the Strait of Hormuz until further notice,” the Danish group said in an online advisory. “The safety of our crews, vessels and customers’ cargo remains our key priority,” it said.
Federation of Indian Export Organisations (FIEO) President SC Ralhan said the ongoing conflict has already begun to disrupt established global logistics channels.
Air routes are being altered, and maritime trade through the Red Sea and key Gulf straits faces heightened uncertainty. If diversions become prolonged, shipments may increasingly have to reroute via the Cape of Good Hope, adding an estimated 15-20 days to transit time for Europe and the United States, Ralhan has said.
The disruptions may push freight rates and insurance premiums for traders.
Exporters stated that it may take few days to get a clarity on the availability of shipping capacity, new routes, insurance and freight rates.
West Asia has major routes through which India’s exports to the biggest markets of the US and Europe pass.
However, India is unlikely to face any immediate physical disruption in oil supplies despite escalating tensions around Iran and the Strait of Hormuz, but higher crude prices and broader macroeconomic pressures are expected in the near term, officials and analysts said.
Indian refiners currently hold sufficient crude inventories to meet at least 10 days of requirements, with fuel stocks covering another 5-7 days, cushioning the impact of any short-duration disruption.
Even as rapidly unfolding developments in West Asia raise geopolitical uncertainty, contingency plans – including tapping diversified suppliers in US, West Africa, Latin America and even Russia as well as strategic reserves – are in place, they said.
The Strait of Hormuz, one of the world’s most critical energy chokepoints, handles nearly 20 per cent of global petroleum liquids and about a fifth of global LNG shipments. About 2.5-2.7 million barrels per day, or roughly 50 per cent of India’s crude imports, transit through the route, largely sourced from Iraq, Saudi Arabia, the UAE and Kuwait.
India’s exports to the US stood at USD 86.5 billion, USD 98.4 billion to Europe and USD 58.8 billion to West Asia. Taken together, these regions account for about 56 per cent of India’s merchandise exports.
From 2023 to 2025, the conflict between Israel and Hamas led to a significant jump in freight rates and transport movement times. Shipping lines had to abandon the Red Sea route and used the Cape of Good Hope on the tip of Africa, increasing travel times by 15-20 days between India and the West.
Though last time the tensions were limited to an area, this times situation does not look good.
Freight rates are usually adjusted at the start of the month by major shipping lines, and on Monday, new rates will be published, he said. At the start of 2026, the rates were contracting.
Agencies