How US-Israel-Iran conflict is disrupting India's energy, industry and agriculture sectors

• GAIL, IOC to cut gas supplies to industrial customers by 10-30%
  
  
• Gas shortages may adversely impact industrial, fertiliser output
  
  

From 28 February 2026, a military conflict between the United States, Israel, and Iran has pushed the Middle East into a dangerous new phase. What began as strikes on Iranian military facilities quickly spread across the region. Missiles were launched, airspace was closed, and ships began avoiding one of the worlds most important energy routes.

The conflict is unfolding thousands of kilometres away from India. Yet its effects are already being felt across Indian factories, farms, and energy markets.

The global energy route at risk

At the centre of the crisis is the Strait of Hormuz. This narrow waterway connects the Persian Gulf to global shipping lanes. Nearly a fifth of the worlds oil and a large share of liquefied natural gas (LNG) pass through this route.

As tensions rose, ships carrying oil and gas slowed down or stopped using the route because of security risks. This immediately pushed global energy prices higher. Oil prices rose from about $66 per barrel earlier in the year to more than $80. LNG prices in Asia jumped even faster, more than doubling within a few days.

Why India is highly exposed

For India, this is a serious problem. India imports about 85% of its crude oil and nearly half of its natural gas. A large portion of these supplies comes from the Middle East and passes through the Strait of Hormuz. If the route is disrupted, the country's energy supply quickly comes under pressure.

The crisis became more severe when Qatar, one of India's biggest gas suppliers, temporarily halted LNG production and shipments because of the conflict. Tankers could not safely reach the export terminal at Ras Laffan. Soon after, Petronet LNG, India's largest LNG importer, warned buyers about supply disruptions.

Companies such as GAIL and Indian Oil Corporation (IOC) then began cutting gas supplies to industrial customers by around 10-30%.

Factories begin to feel the impact

These cuts are already affecting businesses across the country.

In Gujarat, the ceramic manufacturing hub of Morbi offers a clear example. The town produces a large share of India's ceramic tiles and exports them worldwide. But the industry depends heavily on imported gas and propane for fuel.

As supplies tightened, around 50 ceramic factories shut down within days. Many other plants say they can only continue operations for a short time with their remaining fuel stocks.

Gas rationing is also spreading to other industries. Adani Total Gas has asked industrial customers to limit their gas use to only 40% of their contracted supply. If they use more than that, they must pay spot market prices that are almost three times higher.

This means many factories may have to reduce production because fuel has become too expensive.

A growing risk for agriculture

The impact goes beyond manufacturing. The conflict is also threatening India's fertiliser supply.

Natural gas is the main raw material used to produce urea, the fertiliser most widely used by Indian farmers. Because LNG shipments have slowed, fertiliser companies have been warned to prepare for gas supply cuts of up to 40%

India's fertiliser plants normally produce about 2.5 million tonnes (mnt) of urea each month. If gas shortages continue for even a month, production could fall by about 1 mnt.

The timing could not be worse. The country is now preparing for the kharif crop season, which begins with the monsoon in June. This season produces more than half of Indias food grains. If fertiliser supplies fall, crop yields may drop, and food prices could rise later in the year.

Emergency moves to secure oil

To prevent a sudden oil shortage, the United States has taken an unusual step. Washington recently granted India a temporary 30-day waiver allowing refiners to buy Russian crude oil that is already loaded on ships and stuck at sea.

Indian refiners quickly moved to secure these supplies. State-run companies have already purchased about 20 million barrels of Russian oil from traders.

But the global market has tightened. Russian crude that was once sold at a deep discount is now trading at a premium of $4 to $5 per barrel over Brent crude.

The waiver is only a short-term solution meant to stabilise energy markets while the conflict continues.

A war that has spread beyond the battlefield

For India, the crisis shows how closely its economy is tied to events in the Middle East. Higher oil and gas prices can raise transportation costs, push up inflation, and slow industrial production. Disruptions in fertiliser supplies could even affect agriculture months later.

If the conflict eases soon, these effects may remain temporary. But if the war continues or spreads across the region, the impact could deepen.

A war that began in the Gulf is already reaching Indian factories, farms, and households. In today's connected world, even distant conflicts can quickly shape everyday life at home.