India hit by high oil prices and flight cancellations amid conflict with Iran

New Delhi is feeling the pressure as tensions in the Middle East show no signs of cooling, with high oil prices likely to increase the country’s already substantial energy import bill, while disruptions to flight routes hamper airline operations.

India imports almost 85% of its crude oil, equivalent to about 4.2 million barrels a day, said Pankaj Srivastava, senior vice president at energy research firm Rystad Energy, who said that even “a few dollar increase in prices can materially affect (the country’s) energy economy.”

“Rising (oil) prices will weigh on the balance of payments and could put further pressure on the rupee,” he added.

Oil prices have soared since US and Israeli attacks on Iran (OPEC’s fourth-largest oil producer) began over the weekend, putting a supply shock in the spotlight. The Islamic Republic’s supreme leader, Ayatollah Ali Khamenei, was assassinated, prompting waves of attacks by Tehran across the region, targeting Middle Eastern countries with US military bases.

Brent crude oil prices hit a new 52-week high on Monday, rising 9.3% to $79.40 a barrel.

“Each sustained $10 per barrel increase in oil prices will directly impact Asia’s GDP growth by 20-30 (basis points),” Morgan Stanley said in a note on Sunday, adding that India could be especially vulnerable.

India’s current account deficit, which represents 1.2% of its GDP, would widen by 50 basis points for every $10 per barrel rise in the price of oil, analysts said.

“Thailand, Korea, Taiwan and India would be more exposed to a decline in growth due to their larger oil and gas balance sheets,” the report said.

According to experts, oil trafficking through the Strait of Hormuz has been halted due to sky-high insurance rates due to Iran’s attacks on US bases in the Gulf countries, which is also driving up oil prices.

The Strait of Hormuz is a vital waterway connecting major energy producers (including Saudi Arabia, Iran, Iraq and the United Arab Emirates) to global markets and is responsible for the passage of around 20% of the world’s oil supplies.

The latest ship tracking data suggests that around half of India’s crude oil imports currently transit the Strait of Hormuz, global brokerage Nomura said in a report on Sunday.

“It’s a bad time for India,” Ellen Wald, president of Transversal Consulting, told CNBC’s “Inside India” on Monday. “India’s oil purchases will come under the microscope” if it buys additional cargoes of Russian oil, he added.

India imported 1.16 million barrels per day of Russian oil as of a week ago, less than its average consumption of 1.71 million barrels per day in 2025, according to energy data provider Kpler. It was replacing this oil with supply from the Middle East, which has now been disrupted.

Since August last year, Indian exports to the United States were subject to a 50% tariff rate, of which 25% was a punitive tariff designed to deter India from buying Russian oil.

Following an interim trade deal last month, the United States removed the punitive tariff on India, saying New Delhi had “committed to stop directly or indirectly importing oil from the Russian Federation” and would purchase “energy products from the United States.”

But Washington warned New Delhi that it will monitor India’s imports of Russian oil and that any attempt to resume purchases could lead to a renewal of punitive tariffs. That makes any supply disruption due to the conflict with Iran even more problematic for India.

Despite the scrutiny, Wald said: “I have a feeling that no one is going to blame them (India) for doing what they have to do to get through the next month.”

India’s resumption of Russian oil purchases remains a likely scenario as “a significant volume of Russian crude of the appropriate grade is already available in the water,” Rystad Energy’s Shrivastava said.

While the impact of rising oil prices is a major concern for New Delhi, flight disruptions due to the closure of airspace in the Middle East are an immediate strain affecting travelers to and from India.

Westbound flights from India fly over Iran and the Arabian Peninsula, said Sajay Lazar, chief executive of Indian aviation consultancy Avialaz Consultants. “The Middle East corridor is India’s largest corridor to the west, and this (disruption) will severely impact Indigo and Air India,” he added.

With the Middle East effectively a “war zone” and the ongoing closure of Pakistani airspace to Indian carriers, some flights bound for Europe and the United Kingdom from India have been cancelled, while others are being diverted.

Shares in Indian passenger airline IndiGo, which trades as Interglobular aviationopened almost 5% lower on Monday.

The company, which did not respond to CNBC’s request for comment, said in a post Monday that “the temporary suspension of select international flights operating through parts of Middle East airspace has been extended.”

Tata Group and Singapore Airlines-Its owned Air India canceled all flights to and from the United Arab Emirates, Saudi Arabia, Israel and Qatar for Monday, it said in a post on

Aviation experts say alternative routes will not only increase flight times but also significantly increase costs for these airlines. Currently, westbound flights from India are experiencing up to 4 hours of longer flight time, they said.

“The weekly impact for Indian and international airlines flying to and from India stands at an extremely conservative estimate of Rs 875 crore (around $96 million),” said aviation expert Mark D. Martin of Martin Consulting. He added that the “airspace situation” is unlikely to improve for at least a week.

On Sunday, Trump told the Daily Mail newspaper that the conflict with Iran could last the next four weeks. Meanwhile, Iran’s security chief Ali Larijani said in a post on X that Tehran has no plans to enter into negotiations with the United States.

If the situation worsens further, India could seek access from China to use its airspace from the north, allowing planes to fly over the Commonwealth of Independent States towards Europe, Martin said.

According to India’s aviation regulator, a total of 350 flights operated by Indian domestic airlines were canceled on Sunday.