Rising Oil Prices, Shipping Risks Loom, But India’s Trade Outlook Remains Strong

A wider Middle East conflict is expected to have an impact on oil supplies from Saudi Arabia, Iraq, Kuwait and the UAE, which would lead to a sharp spike in oil prices.

Shipping could also get hit as Yemen's Houthi rebels have already warned that they would resume their attacks on ships if the US attacked Iran.

Source : Freepik

While geopolitical tensions in the Middle East, including the ongoing Iran-Israel conflict, pose certain challenges to global trade dynamics, India’s export sector remains resilient and adaptive, the Federation of Indian Export Organisations (FIEO) said on Monday.

The country’s trade with both Iran and Israel, while important, constitutes a small share of the overall export-import basket.

"The government and industry are jointly monitoring developments to ensure minimal disruption," FIEO President S.C. Ralhan said.

"We do anticipate some short-term impact on demand and logistics, particularly in the Gulf region, which serves as a crucial hub for Indian exports. Increased shipping costs, longer transit times, and rising marine insurance premiums may add pressure, especially in price-sensitive sectors," he said in a statement.

A wider Middle East conflict is expected to have an impact on oil supplies from Saudi Arabia, Iraq, Kuwait and the UAE, which would lead to a sharp spike in oil prices. Shipping could also get hit as Yemen's Houthi rebels have already warned that they would resume their attacks on ships if the US attacked Iran.

India imports around 85 per cent of its crude oil requirement.

However, Indian exporters have time and again demonstrated agility in re-routing shipments, diversifying markets, and managing financial exposures, the FIEO said.

The robust MSMEs and large-scale exporters, coupled with strong government support mechanisms, will help cushion any near-term shocks.

Crude oil price volatility is being closely watched, as it can influence both inflation and logistics costs. But India's diversified energy procurement strategy and the Reserve Bank's proactive stance help maintain liquidity and macroeconomic stability.

"Overall, while there are temporary headwinds, we see this as an opportunity for Indian exporters to explore alternate routes, strengthen regional partnerships, and consolidate India’s role as a reliable trade partner in uncertain times," Ralhan said.

The FIEO said it is committed to supporting exporters with timely guidance, market intelligence, and policy advocacy to ensure continued momentum in our global trade journey.

Meanwhile, India’s total exports of merchandise and services stood at $71.12 billion in May, which represents a growth of 2.77 per cent over the same month of the previous year.

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)