Exporters turn jittery as West Asia conflict spirals

Rising oil prices, further shipping route disruptions set to increase costs

- SHREYA NANDI

Indian exporters are increasingly anxious about the intensifying conflict in West Asia, which now directly involves three countries - Israel, Lebanon, and Iran. The potential for further escalation raises fears of rising shipping costs, disruptions to supply chains, and increased oil prices.

Compounding these challenges is a workers' strike in East and Gulf Coast ports of the US, India's largest trading partner and biggest export destination.

Ajay Sahai, director-general and chief executive officer of the Federation of Indian Export Organisations (FIEO), said that while an immediate impact of the latest flare-up in West Asia has yet to be observed, oil prices could rise significantly if the conflict deepens. Brent crude price has been rising for the past two days, and was near $74 a barrel at 9.15 pm IST. "First, Iran is a key oil supplier, despite sanctions. Should tougher sanctions be imposed on Iran, we risk losing a crucial supplier, which would likely push oil prices higher. Second, the regional instability will exacerbate these issues," Sahai said.

“Even air routes are being affected following Iran’s missile attack (on Israel). Supply chain disruptions are likely, and general investment sentiment may also suffer,” he added.