• The US-Iran peace agreement and reopening of the Strait of Hormuz are expected to ease economic pressure on India after more than three months of disruption.
• India was heavily affected due to its dependence on West Asia for crude oil, LNG imports, trade, and remittances.
• The Strait of Hormuz, through which nearly 20% of global oil and LNG trade passes, became the focal point of the crisis.
• India imports nearly 90% of its crude oil requirements and relies significantly on Gulf nations for LPG and LNG supplies.
• Rising geopolitical tensions pushed Brent crude oil prices above $100 per barrel, increasing India's import bill and inflation risks.
• State-owned oil marketing companies (OMCs) faced under-recoveries of nearly ₹30,000 crore per month due to elevated crude prices.
• To reduce losses, petrol and diesel prices were increased multiple times during May 2026.
• Petrol prices in Delhi crossed ₹100 per litre, reaching ₹102.12, while diesel climbed to ₹95.20 per litre.
• The Indian rupee came under significant pressure as higher oil imports increased demand for US dollars.
• The rupee touched a record low of 96.90 per US dollar and weakened by more than 6% since the conflict began.
• Expectations of smoother energy supplies after the peace agreement helped the rupee recover partially.
• Trade with West Asia was disrupted due to shipping challenges, business interruptions, and airspace restrictions.
• India's exports fell 7.44% in March 2026 to $38.92 billion.
• Exports to West Asia declined nearly 58%, falling to $3.5 billion during the month.
• Concerns emerged over remittance inflows as Gulf economies slowed and employment prospects became uncertain.
• Around 9 million Indians working in Gulf countries contribute significantly to India's remittance receipts.
• Indian airlines faced higher operating costs due to airspace closures and longer flight routes.
• Aviation turbine fuel (ATF) costs increased sharply, accounting for as much as 50–60% of airline operating expenses.
• ATF prices were raised by around 10%, taking domestic jet fuel prices to ₹115 per litre under a new price-stabilisation scheme.
• Higher fuel and transportation costs contributed to broader inflationary pressures. Retail inflation increased from 3.48% in April to 3.93% in May 2026.
• Wholesale Price Inflation (WPI) accelerated from 8.3% to 9.68% during the same period.
• Fuel inflation surged to 30.33%, reflecting the sharp rise in energy costs.
• India's foreign exchange reserves also faced pressure due to capital outflows and higher import expenses.