Crisil Ratings has mapped the damage sector by sector. The list goes well beyond fuel prices and refiners.
With the Strait of Hormuz virtually closed, the risk of passage had simply become too high. And with that, one of the world’s most critical energy corridors has gone dark taking with it a supply chain that India depends on more than almost any other country in the world.
India imports 85% of its crude oil. Half of its LNG requirement. Of that, 40–50% of crude and 50–60% of LNG travel through the Strait of Hormuz. When that route closes, it spreads into factories, farms, airlines, jewellers, paint companies, and kitchen stoves.
Crisil Ratings issued a credit alert this week that maps exactly where the damage lands. “If the ongoing geopolitical uncertainties in the Middle East persist or escalate,” Crisil noted, “there could be adverse impact on sectors such as basmati rice, fertilisers, diamond polishing, travel operators and airlines, given their direct exposure to the region.”
Brent crude has already moved sharply. It surged to around $82–84 per barrel from an average of $66–67 during January and February 2026. Asian spot LNG prices have been even more dramatic — jumping from around $10 per MMBtu to $24–25 per MMBtu in a matter of weeks.
“A further surge would widen India’s current account deficit and stoke inflation,” Crisil warned. “It will also impact India Inc’s profits, given the critical role of energy across sectors.”
The Middle East accounts for roughly 30% of global crude oil production and around 20% of global LNG production. Most of it moves through the Strait of Hormuz. India sits at the end of that supply chain.
The second shipping lane worth watching, the Red Sea route via the Suez Canal, is already under stress from Houthi rebel attacks over the past 15–18 months. This connects Asia with Europe, North America, and North Africa. Any further disruption there, as a domino effect of the current conflict, compounds the pressure on shipping times and costs across the board.
Who Gets Hurt
Airlines are among the most immediately exposed. Around 10% of total flights operated by Indian carriers transit to or through the Middle East. Airport and airspace closures — particularly in Dubai, the second-busiest international airport in the world — have already crippled air travel. Further, fuel accounts for 35–40% of airline operating costs. With crude rising and a significant portion of lease liabilities sitting in foreign currency, the margin squeeze is immediate and has limited room for recovery in the near term.
Fertilisers too are facing issues. India imports around 30% of its fertiliser requirement, with the Middle East supplying roughly 40% of that. The region also provides around 30% of key raw material imports — rock phosphate, phosphoric acid, and muriate of potash. Disruption to that supply chain does not stay inside the fertiliser industry.
LNG, which is a feedstock for manufacturing urea, adds another layer. Crisil notes there is “a likelihood of an increase in the international prices for urea and di-ammonium phosphate” — which could result in “a higher subsidy requirement than budgeted by the government.”
Ceramics is a sector that rarely makes headlines but is caught in the crossfire on two fronts simultaneously. LNG and LPG constraints mean most ceramic plants could be forced to operate at lower or even nil utilisation. At the same time, exports account for around 40% of sector revenue, with the Middle East contributing more than 15% of that. Revenue and margins are exposed on both sides at once.
Basmati rice exporters face delays and payment elongation. The Middle East and other west Asian countries account for 70–72% of India’s basmati export volume of nearly 6 million tonnes last fiscal. These are staple diet markets, not discretionary ones — demand will not disappear, but disruption to shipments and payment cycles will stretch working capital for exporters.
Diamond polishers are navigating a sector already under pressure from higher US tariffs. Israel and the UAE together account for around 18% of total diamond exports and roughly 68% of rough diamond imports into India. The mitigant here is that alternative trading hubs exist — Belgium and Hong Kong — with ultimate buyers in the US and Europe. But the rerouting adds friction and cost to a business that was already dealing with margin pressure.
Beyond the directly exposed sectors, a broader group of industries faces pressure through their dependence on crude-linked inputs.
Paints and specialty chemicals have around 30% of production costs linked to crude. Competitive intensity and suppressed demand in some segments limit the ability to pass higher input costs on to customers — which means margin compression rather than price increases.
Tyres have roughly half their operating costs linked to crude prices. Producers may be able to pass on part of the increase, but there is a lag — particularly for original equipment manufacturer sales, which account for around 35% of revenue and carry less pricing flexibility than the replacement market.
Flexible packaging and synthetic textiles are the most crude-exposed of the group, with 70–80% of production costs linked to crude prices. The impact here could be moderate, Crisil suggests, given an improved demand-supply scenario and a somewhat better ability to pass on costs — but with a lag.
City gas distribution faces near-term LNG supply constraints, with imported LNG accounting for around 40% of sector demand. The industrial segment carries the heaviest exposure. Margins get some cushion from the fact that alternative fuel prices for customers are also crude-linked — so the relative economics do not shift as dramatically as the absolute price movement might suggest.
There Are Winners Too
Not every sector loses in an oil shock. Upstream oil companies benefit directly — higher crude prices translate into higher revenues while costs remain largely fixed. Shipping companies, despite rising insurance costs, stand to gain from spiking charter rates. The supply of active vessels through viable routes has shrunk. Tonne-mile demand has risen. That combination tends to be good for freight rates, and therefore for shipping company margins, even in an uncertain environment.
The Bottom Line
Crisil’s overall read is measured. “The near-term impact on most Indian companies is expected to be limited, given their robust balance sheets, which provide a cushion against vulnerabilities.”
Indian corporate balance sheets are in better shape than they were during previous commodity shocks, and that resilience is real.
However, “prolonged geopolitical uncertainties in the Middle East could exacerbate the impact,” Crisil noted, “primarily due to stickily elevated oil and gas prices and disruption of supply chains that could, in turn, stoke inflationary pressures.”
Note that a short oil spike is manageable. A sustained one changes inflation trajectories, current account arithmetic, government subsidy calculations, and corporate earnings forecasts.
