By Anirudh Garg
When news broke about the Iran–Israel conflict in 2025, the world watched closely—and so did Indian investors. Markets reacted quickly. Oil prices jumped nearly 9 per cent in just one week. Stock markets wobbled. Gold prices went up.
But why does a conflict thousands of miles away matter so much for India? And what should investors, from big family offices to regular savers, do to protect their money?
Let’s break it down.
Why the Strait of Hormuz Is a Big Deal
Imagine a tiny, narrow waterway that handles about 25 per cent of the world’s oil shipments. That’s the Strait of Hormuz, controlled by Iran. If fighting disrupts this passage—even for a short time—it could shake global oil supplies hard. Think of it like a major highway that suddenly closes. Deliveries get delayed, prices rise, and everyone feels the pinch.
In the past, even small attacks in this area sent oil prices higher in hours. Now, with tensions rising between Iran and Israel, the risk feels much bigger.
What’s the Real Threat to Oil Prices?
There are two big worries:
- Damage to Iranian oil production—which means less oil on the market.
- Blockades or threats at the Strait of Hormuz—making it harder or riskier for tankers to deliver oil.
Either one would push oil prices up, not because more people want oil, but because supply gets tighter and riskier.
Also Read : Protecting Your Portfolio: Why Gold ETFs Are A Smart Inflation Hedge
Why This Hits India Hard
India imports over 85 per cent of its crude oil. So when oil prices go up, it directly impacts how much we pay at the pump, and how much inflation rises.
The Reserve Bank of India (RBI) tells us something important: “Every $10 increase in oil prices can push inflation up by about 0.3 per cent, and slow down economic growth a bit.”
Right now, the RBI expects oil to stay around $70 a barrel in 2025–26. But if prices keep climbing toward $90 or $100, this could throw off their plans—meaning inflation could rise, and interest rates might stay higher for longer.
That’s not good news for anyone borrowing money or investing in sectors sensitive to interest rates.
What Should Indian Investors Do?
It’s normal to feel nervous when markets get shaky. But history shows these shocks often create buying opportunities. Here’s how to handle the current situation:
1. Don’t Panic—Look for Opportunities
Markets sometimes overreact to news. Use dips to buy into strong sectors like energy, defence, or infrastructure—areas that often benefit in uncertain times.
2. Keep an Eye on Oil-Heavy Industries
Sectors like aviation, logistics, and auto can be hit harder by rising oil costs. Review your portfolio to see if you need to adjust your exposure.
3. Think About Inflation Protection
Gold has always been a reliable hedge during inflation or geopolitical risks. Silver, too, is gaining attention because it’s used in green technologies.
4. Watch RBI’s Moves
If inflation rises and RBI delays cutting rates, fixed income investors may want to prefer short-term bonds to protect returns.
Also Read : Swipe, Jet, Repeat: A Fun Guide To Maximising Travel Credit Card Rewards
The Big Picture: Stay Calm and Invest Smart
Remember, wars and conflicts tend to cause short-term market swings, not long-term damage. After Russia invaded Ukraine, oil prices spiked but later stabilised. Markets recovered.
So, don’t rush to sell or make big changes based on fear. Use this moment to rebalance your portfolio thoughtfully.
Build Resilient Portfolios
You can’t control global conflicts, but you can prepare for their effects. Keep your investments diversified, maintain some cash for opportunities, and avoid overreacting to headlines.
In uncertain times, the investors who stay steady and focused are the ones who come out ahead.
(The author is the Partner and Fund Manager at INVasset, PMS)
[Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP News Network Pvt Ltd.]
