Middle East tensions may hit airlines, basmati exports and fertiliser supply chains: Crisil
The rating agency said sectors with direct exposure to the region — including basmati rice exporters, fertiliser makers, diamond polishers, airlines and travel operators — may see near-term disruptions if tensions persist or escalate.
- Mar 5, 2026,
- Updated Mar 5, 2026 2:08 PM IST
Prolonged geopolitical uncertainties in the Middle East could disrupt supply chains and push up energy prices, potentially impacting several sectors in India ranging from airlines and fertilisers to basmati rice exports and ceramics, according to a credit alert by Crisil Ratings.
Follow live coverage on US-Israel-Iran war here
The rating agency said sectors with direct exposure to the region — including basmati rice exporters, fertiliser makers, diamond polishers, airlines and travel operators — may see near-term disruptions if tensions persist or escalate. Industries dependent on imported liquefied natural gas (LNG) and those linked to crude oil prices could also face cost pressures and operational challenges.
Countries in the Middle East account for around 30% of global crude oil output and nearly 20% of LNG production, with a large portion transported through the Strait of Hormuz. India, which imports about 85% of its crude oil and roughly half of its LNG requirement, relies heavily on shipments through this route. Most shipping vessels have stopped sailing through the Strait since March 1 due to heightened security risks, raising concerns over supply disruptions.
Energy prices have already surged amid the uncertainty. Brent crude has climbed to about $82–84 per barrel from an average of $66-67 in January–February 2026, while Asian spot LNG prices have jumped from about $10 per MMBtu to $24-25 per MMBtu. A further spike could widen India’s current account deficit, stoke inflation and dent corporate profitability across sectors.
Trade exposure to the Middle East remains significant. The region accounted for about 15% of India’s exports and roughly 20% of imports in the first nine months of the current fiscal. Apart from crude and petroleum products, India exports basmati rice, fertilisers and diamonds to the region, alongside capital goods and spices.
For the basmati rice sector, which sends around 70-72% of its exports to West Asian markets, shipment delays and slower payments could stretch working capital cycles if tensions persist. Fertiliser producers may also face supply chain disruptions, as the Middle East supplies around 40% of India’s fertiliser imports and a substantial share of raw materials such as rock phosphate and phosphoric acid.
Diamond polishers could see trading disruptions as Israel and the United Arab Emirates together account for about 18% of India’s diamond exports, though alternative trading hubs such as Belgium and Hong Kong could mitigate the impact.
Airlines may be among the most directly affected. About 10% of flights operated by Indian carriers transit to or through the Middle East, and airspace restrictions have already disrupted travel. Diversions on routes to Europe and the US could increase flying time and fuel consumption, raising costs in a sector where fuel already accounts for 35-40% of operating expenses.
Travel operators may face higher cancellations and booking delays, while industries such as ceramics and city gas distribution could see supply constraints due to their reliance on imported LNG.
Several downstream sectors — including tyres, paints, specialty chemicals, flexible packaging and synthetic textiles — may also see margin pressure because a large share of their production costs is linked to crude oil prices. However, some companies may be able to pass on part of the cost increase to customers with a lag.
Despite these risks, Crisil said the near-term impact on most Indian companies is expected to remain limited because of strong balance sheets. However, prolonged disruptions could amplify the pressure through sustained high oil and gas prices and continued supply chain disruptions, which may also fuel inflation.
The agency added that it is closely monitoring developments and will assess the credit impact on individual companies on a case-by-case basis.
Prolonged geopolitical uncertainties in the Middle East could disrupt supply chains and push up energy prices, potentially impacting several sectors in India ranging from airlines and fertilisers to basmati rice exports and ceramics, according to a credit alert by Crisil Ratings.
Follow live coverage on US-Israel-Iran war here
The rating agency said sectors with direct exposure to the region — including basmati rice exporters, fertiliser makers, diamond polishers, airlines and travel operators — may see near-term disruptions if tensions persist or escalate. Industries dependent on imported liquefied natural gas (LNG) and those linked to crude oil prices could also face cost pressures and operational challenges.
Countries in the Middle East account for around 30% of global crude oil output and nearly 20% of LNG production, with a large portion transported through the Strait of Hormuz. India, which imports about 85% of its crude oil and roughly half of its LNG requirement, relies heavily on shipments through this route. Most shipping vessels have stopped sailing through the Strait since March 1 due to heightened security risks, raising concerns over supply disruptions.
Energy prices have already surged amid the uncertainty. Brent crude has climbed to about $82–84 per barrel from an average of $66-67 in January–February 2026, while Asian spot LNG prices have jumped from about $10 per MMBtu to $24-25 per MMBtu. A further spike could widen India’s current account deficit, stoke inflation and dent corporate profitability across sectors.
Trade exposure to the Middle East remains significant. The region accounted for about 15% of India’s exports and roughly 20% of imports in the first nine months of the current fiscal. Apart from crude and petroleum products, India exports basmati rice, fertilisers and diamonds to the region, alongside capital goods and spices.
For the basmati rice sector, which sends around 70-72% of its exports to West Asian markets, shipment delays and slower payments could stretch working capital cycles if tensions persist. Fertiliser producers may also face supply chain disruptions, as the Middle East supplies around 40% of India’s fertiliser imports and a substantial share of raw materials such as rock phosphate and phosphoric acid.
Diamond polishers could see trading disruptions as Israel and the United Arab Emirates together account for about 18% of India’s diamond exports, though alternative trading hubs such as Belgium and Hong Kong could mitigate the impact.
Airlines may be among the most directly affected. About 10% of flights operated by Indian carriers transit to or through the Middle East, and airspace restrictions have already disrupted travel. Diversions on routes to Europe and the US could increase flying time and fuel consumption, raising costs in a sector where fuel already accounts for 35-40% of operating expenses.
Travel operators may face higher cancellations and booking delays, while industries such as ceramics and city gas distribution could see supply constraints due to their reliance on imported LNG.
Several downstream sectors — including tyres, paints, specialty chemicals, flexible packaging and synthetic textiles — may also see margin pressure because a large share of their production costs is linked to crude oil prices. However, some companies may be able to pass on part of the cost increase to customers with a lag.
Despite these risks, Crisil said the near-term impact on most Indian companies is expected to remain limited because of strong balance sheets. However, prolonged disruptions could amplify the pressure through sustained high oil and gas prices and continued supply chain disruptions, which may also fuel inflation.
The agency added that it is closely monitoring developments and will assess the credit impact on individual companies on a case-by-case basis.