The Strait of Hormuz, through which nearly 20% of global oil flows and over 40% of India’s crude imports transit, is now at the centre of a potential supply shock that could remake India’s macro landscape. Brent crude oil futures have already hit multi-month highs of above $80 per barrel. Scenario analysis suggests that a Hormuz disruption could push prices above $90 per barrel, while a broader regional conflict could take crude beyond $100. Every $1 rise in crude adds approximately $2 billion to India’s annual import bill.
Export risk for India
The Middle East takes 17% of India’s goods exports, on par with the US and the EU, supplies 55% of its crude oil, and accounts for 38% of worker remittances, which amounted to $45 billion in FY24 alone, according to calculations by global brokerage firm Jefferies.India receives 2.5–2.7 million barrels per day, or 50–60% of its crude, via the Strait, along with roughly 50% of its LNG. Kuwait, Qatar and Bahrain have no alternative export routes whatsoever.
Iran’s current crude output stands at approximately 3.5 million barrels per day, of which it exports 1.5–2 million barrels per day. Initial estimates suggest 10–13 million barrels per day of global crude exports, or 10–13% of global demand, could be affected by a blockade, along with roughly 15% of global LNG supplies.
The MENA region accounted for 31% of India’s total EXIM cargo in FY25, according to JM Financial, underscoring how deeply the conflict’s tentacles could reach into Indian port volumes and trade flows.
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OMCs: The most immediate casualty
Oil marketing companies face the sharpest and most direct hit. JM Financial calculates that every $1 per barrel rise in Brent reduces OMCs’ auto-fuel gross marketing margins by ₹0.55 per litre and drags their consolidated EBITDA down by 7–9%, assuming no change in retail petrol and diesel prices or excise duties. At spot crude of around $72.9 per barrel, OMC auto-fuel marketing margins have already compressed to ₹2.9 per litre against a historical norm of ₹3.5 per litre.
HPCL is the most exposed, given its highest leverage to the marketing business. JM Financial carries a ‘Reduce’ on all three major OMCs — HPCL (target price ₹410), IOCL (target price ₹165), and BPCL (target price ₹350) — citing structural concerns around their aggressive capex plans even before the current conflict.
If Brent sustains above $80 per barrel, Jefferies notes, retail price adjustments and/or excise duty cuts may become unavoidable, adding fiscal pressure alongside the ballooning current account deficit. Every $10 per barrel jump in crude carries a 20–25 basis point impact on CPI if passed on to consumers, or on the fiscal deficit if the government absorbs it through tax cuts.
Infrastructure: L&T, KEC, KPIL directly in the line of fire
Among capital goods names, L&T carries the most concentrated risk. The Middle East now accounts for 37% of its ₹7.33 lakh crore order book, and 33% of its order inflows over the same period. L&T has emerged as a dominant contractor in hydrocarbons along the Persian Gulf and Eastern Saudi Arabia. A real estate slowdown in the UAE, which has been cushioning L&T against Chinese competition, could further intensify competitive pressure and compress margins, JM Financial notes.
KEC International has a 20% Middle East share in its ₹367 billion order book and a 28% share in year-to-date order inflows. Kalpataru Projects (KPIL) has 11% of its ₹63,300 crore order book tied to the region. Both companies face execution headwinds as sea lanes face disruption. Elara Securities also flags Voltas as having meaningful capital goods orderbook linkages to the Middle East.
Also read: L&T shares crash over 7% as US–Israel strike on Iran raises Mideast exposure risks
Thermax had 39% of its 9MFY26 order inflows from international markets, with UAE exposure rising sharply after a large industrial infrastructure contract with ADNOC. Cummins India derives 17% of revenues from exports, with significant Middle East concentration, and faces additional risk from the Red Sea closure affecting European shipments.
AIA Engineering faces a different but no less acute problem: with 65% of revenues from exports, rising ocean freight rates, already up 300 basis points year-on-year to 9.3% of revenues in Q3FY26, and a 6.6% direct Middle East volume exposure, could squeeze near-term margins and slow order conversion.
Aviation, logistics and airports: Cascading disruption
IndiGo faces a double blow as the Middle East accounts for 35–40% of its international capacity and 10–12% of total capacity, making it the most exposed listed airline to airspace disruptions and route cancellations. Higher ATF costs from the crude spike compound the pain.
GMR Airports faces risk from Middle East flight cancellations and the rerouting of European flights. JSW Infrastructure has direct exposure via its Fujairah liquid terminal storage, which contributed $36 million in EBITDA in FY25, or roughly 13% of the company’s total. Adani Ports could be impacted by declining oil tanker, LNG and container volumes through the Persian Gulf.
Aegis Logistics faces adverse impact on LPG imports as Middle East supply disruptions drive up import prices of LPG and propane.
Gas distributors and fertilisers feel the heat
High LNG prices resulting from any Strait disruption would increase feedstock costs for city gas distributors, including IGL, MGL and Gujarat Gas, while also affecting volumes for Petronet LNG and GAIL. For fertiliser companies, a 10% rise in global urea prices implies an incremental subsidy burden of approximately ₹2,500 crore, with phosphatic players only partially cushioned by NPK substitution, according to Elara Securities.
Consumer, pharma and others
Companies with 5–10% Middle East revenue exposure are numerous. Jefferies flags Dabur and Titan among consumer names; Ajanta Pharma, Biocon and Cipla in pharmaceuticals; major hospital chains where 8–10% of revenues come from international patients; and PB Fintech and Voltas among others. Newgen Software has approximately 30% of its revenues tied to the region.
Auto exporters face margin pressure from both higher freight costs, estimated at 1–3% of revenue impact, and crude-linked input cost inflation. Tyre companies, Elara notes, are structurally more exposed due to their dependence on crude-linked petrochemical inputs. Paints and tiles remain vulnerable given weaker pricing power relative to input cost pass-through.
Defence: The one clear beneficiary
Against this landscape of risk, defence stocks stand out as the unambiguous beneficiary. India’s defence spending rose 18% year-on-year in FY26 against a 10-year CAGR of 6–8%, and similar growth is budgeted for FY27. With India’s defence capex at just 0.6% of GDP, well below its previous peak of 1%, Jefferies remains positive on BEL, Data Patterns and HAL, expecting the current geopolitical environment to sustain double-digit CAGR in defence spending for the medium term.
The duration of the conflict and whether the Hormuz Strait faces a sustained closure remain the pivotal unknown. The answer will determine whether this week’s market dislocation is a buying opportunity or the opening chapter of a more prolonged reckoning for Corporate India.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)