Brent crude prices may rise to 135 dollars a barrel if both Strait of Hormuz and Bab el Mandeb close. CareEdge Ratings estimates partial disruption could lift prices to 95 dollars, a four week closure to 120 dollars and an eight week shutdown to 135 dollars. India depends heavily on these routes with 40% of crude imports and major LNG and LPG supplies passing through Hormuz while 50% of exports and 30% of imports transit the Red Sea.
Higher energy costs, surging war risk insurance premiums and longer shipping routes via Cape of Good Hope could sharply increase freight and working capital expenses. Insurance premiums have already jumped nearly 1000%. Shipping detours add 4000 to 6000 nautical miles and up to 20 days.
Indian corporates especially SMEs and import dependent sectors such as aviation, fertilisers and packaging may face liquidity stress and margin compression. Inflation risk will rise, the rupee may weaken and credit costs could climb. Diversification through Russian crude offers limited relief.
Geopolitical tensions remain high as Iran has asked Houthis to prepare for Bab el Mandeb closure if United States strikes Iranian infrastructure. Attacks on Saudi oil vessels have already been reported. Maritime traffic data shows fragile transparency with shadow fleet activity and dark transits increasing.
