A Ceasefire will not Fix the Fuel Bill

The way the Iran-US war unfolded and caused damage to oil assets in the Middle East, it is clear that even if Iran and the United States announce and implement a permanent ceasefire immediately, the global oil market will not recover for months. For natural gas, the disruption is measured in years, not months. This is not pessimism. This is what the data silently speaks.

The conflict has done something that no geopolitical shock since the 1973 Arab oil embargo has managed to do. It has simultaneously disrupted production, transit, and insurance across the same chokepoint. Brent crude, which was trading near $70 per barrel before hostilities began on February 28, 2026, crossed $113 per barrel, a 60% spike in under four weeks. This is not a paper price. Physical oil supply from a region accounting for 20% of global daily output has been interrupted simultaneously at the source, in transit, and at the point of export.

At present, the global energy market is facing not one crisis but two. Most importantly, these two operate on entirely different timescales. On crude oil, the core structural problem is the Strait of Hormuz. This is the world's most critical energy chokepoint, and unlike the Russia-Ukraine disruption of 2022, where Russian oil was rerouted to Asia through alternative logistics, the Strait has no viable workaround at scale.

The RBI's 2026 Forex Overhaul: Reining in Volatility and Risk

The RBI’s decision to cap banks’ net open rupee positions (NOP-INR) at 100 million dollars per day and force the unwinding of large arbitrage-linked forex market trades has a mixed impact on the Indian financial system and the broader economy. This decision of the RBI aims to stabilise the falling rupee and reduce the speculative froth. However, it also squeezes bank profits, tightens forex market liquidity, and adds some short-term volatility for the banking and financial system.

On the Financial System

This massive unwinding has had a visible impact on the rupee. It gained about 2 per cent over seven trading sessions, recovering from recent record lows near 95 per dollar to around the 92.50–93 range. The selling of long dollar positions by banks has translated into a steady flow of dollars into the Indian forex market, providing short-term support to the rupee.

India's Economic Outlook 2026: Trade Growth vs. Global Energy Shocks

Iran and the United States have likely reached a temporary peace agreement. However, it remains uncertain just how temporary or permanent this agreement will prove to be. Nevertheless, it can be viewed as a temporarily positive development for the world economy!

Even if this conflict permanently ends right now, it would continue to have detrimental repercussions for India for a considerable period. This conflict has negatively impacted the oil fields of all nations across the Middle East. Some oil fields have been completely or partially destroyed, while entire inland transportation networks have collapsed. Restoring the entire system and returning to normalcy is expected to take months if not years.

It will take several months for elevated oil prices to revert to their previous levels (however, it depends on oil producing nations). This will not be possible until the oil fields of all Middle Eastern nations resume operating at their full capacity.

The 2026 Hormuz Crisis: India's Economic 'Double Squeeze'

The Indian economy in early 2026 is going through a period of resilient growth despite significant geopolitical instability in West Asia. Hence, the Reserve Bank of India has maintained a neutral policy stance with interest rates held at 5.25%, balancing a favourable domestic inflation trend against rising global risks like surging oil and fertiliser costs.

Agricultural prospects remain strong due to high reservoir levels and a good Rabi harvest. However, the central bank may eventually need to hike rates to protect the free-fall in the rupee as well as a possible rise in inflation caused by the global energy crisis. Also India is experiencing fall in its imports to the Middle East.

Indian exports post-Trump's tariff have taken another hit. India’s West Asia exports have been affected due to rising export costs as well as disruption in the region due to war between Iran-Israel-US.

Crisis at the Strait: The 2026 Energy Shock & Economic Fallout

The war between Iran, Israel, and the United States is becoming a global catastrophe. The conflict has triggered a massive global energy crisis following the blockade of the Strait of Hormuz, causing crude oil and natural gas prices to skyrocket. If the war doesn't reach an conclusion soon, crude oil prices may touch the level of $150/barrel.

Beyond fuel shortages, there is a risk of a systemic economic collapse affecting international aviation, global food security, and financial markets. One of the largest economies like India and Europe are particularly vulnerable to the oil shock resulting inflationary pressures and potential recessions if not managed properly.

This war will not only affect economic growth but cause long-term socioeconomic shifts, including a permanent exodus of expatriates from the Persian Gulf, and a large number of people across the globe falling into a vicious cycle of poverty and hunger.

India's Economic Double Whammy: Navigating the Oil and Currency Crisis

India is facing economic challenges, primarily driven by soaring global energy prices and a historic depreciation of the rupee. Geopolitical conflicts in West Asia have disrupted oil supplies, causing a "double whammy" that threatens to widen the trade deficit and push inflation beyond the Reserve Bank of India's target of 4% (plus-minus 2%).

GDP growth is expected to be lower than earlier forecasted, while the Reserve Bank of India (RBI) is intervening in currency markets to stabilize the exchange rate.

India's double side problems; one with rising oil price and the second one with depreciating rupee; are cause of concern for India. To mitigate these risks and bypass dollar-based sanctions, India is increasingly exploring "petro-rupee" arrangements and settling oil trades in alternative currencies like the Chinese Yuan or Dirham.

The 2026 Hormuz Crisis: India's Economic Double Squeeze

The Indian economy, indeed the beacon of strength and resilience, is indeed moving along the path of strong growth, while the geopolitical storm continues to brew in the West Asia. This phase is characterized by the subtle interplay between positive internal factors and negative external factors.

The Reserve Bank of India (RBI), a prudent regulator, has prudently maintained its neutral stance by keeping the interest rate unchanged at 5.25%. This is because the RBI, while recognizing the positive Indian inflationary scenario, which comfortably settled within the 4% +/- 2% band in Q4 2025, driven largely by the supply-side management and the moderation in food inflation, is also being cautious in the face of the ominous external scenario. The increase in oil prices (Brent Crude), now trading around $101 per barrel, and the rise in fertilizer prices, driven largely by the West Asian scenario, are indeed the inflationary challenges that the RBI is monitoring.

Going deeper, the agricultural sector continues to be a strong pillar, as the strong monsoon received during the year has ensured reservoir levels are currently at 105% of the 10-year average, which will ensure adequate water supplies for the upcoming Kharif crop, in addition to the strong Rabi crop received during the year. Yet, the elephant in the room continues to be the capital outflow story, which would become a reality if the global interest rates continue to inch upwards or if the geopolitical situation becomes more unstable, which would lead to a further weakening of the rupee. While the RBI reserves are currently healthy at about $700 billion, the free fall of the rupee would inevitably lead to imported inflation, which would force the RBI to eventually raise rates, perhaps in a pre-emptive action, to ensure the stability of the rupee as well.

Petro-Yuan vs Dollar: Is the Oil Market About to Change Forever?

80% of the world’s oil runs on the Dollar… but what if that suddenly changes?

Is the US Dollar losing its grip on global oil trade? 🌍💰

For decades, the Petrodollar system has dominated the global economy, with nearly 80% of oil transactions conducted in USD. But a quiet shift is underway…

Countries like China, Russia, Iran, UAE, and even Saudi Arabia are exploring alternative currencies like the Chinese Yuan, Euro, Yen, and Rupee for oil trade. 📉

The Yuan’s global trade share is rising, and discussions around the “Petro-Yuan” are gaining momentum—especially amid geopolitical tensions like the Iran-Israel conflict.

But can the Yuan really replace the Dollar?

Despite growing adoption, the Yuan still faces major hurdles: Capital controls
Limited liquidity
Lower financial market depth

Meanwhile, the Dollar still dominates: ~40% of global trade

India’s Oil Strategy Just Flipped 2004 vs 2026

What if I tell you that India’s biggest oil supplier today was almost irrelevant just 5 years ago?

Back in 2004, India’s oil imports were heavily dominated by the Middle East. Twenty years later, that basket has transformed into a globally diversified mix, with Russia, Iraq, and even the US now major players.

This isn’t just about who supplies India oil it’s about energy security, trade costs, and inflation.

In 2004, India’s crude imports were almost entirely from West Asia Saudi Arabia, Iran, Iraq, UAE dominating the share.

By 2026, India is importing about 5 million barrels per day, with Russia alone supplying 38%, Iraq around 12%, Saudi Arabia 10%, UAE 8%, and the US about 7%. This is a textbook shift from single‑region dependence to a multi‑source, globally diversified basket.
From an economics lens, this diversification is about risk‑return trade‑offs and supply‑elasticity.

Dependence on one region created high geopolitical risk any conflict or sanction could shift the supply curve left, pushing prices up in India’s inelastic oil market.

Modi Government Slashes Excise Duties on Petrol and Diesel

Amidst rising prices in the international market, the UPA's Manmohan government issued oil bonds worth approximately ₹1.5 lakh crore to provide affordable fuel to consumers. This measure ensured that, during a period of high inflation, the common citizen would not have to directly bear the burden of increased oil prices. This decision also served a secondary objective: it ensured that the government which had already become unpopular due to various scandals would not have to face further political difficulties. In essence, the Manmohan government chose to shift the burden onto the future in order to ease the present.

To repay the very debt incurred through these oil bonds issued by the UPA government to oil companies and which had since ballooned to approximately ₹3.5 lakh crore the Modi government continued to sell fuel to the same consumers at elevated prices for nearly seven to eight consecutive years, even when international oil prices had declined. The Modi government faced significant criticism for this approach. Prime Minister Narendra Modi himself faced personal allegations of favoring oil companies.

Be that as it may.

India is Rewriting its Energy Strategy in Silence

Everyone thinks India is silent on the Iran–Israel war… but what if that silence is actually a strategy?

While rumours scream “fuel crisis,” something very different is happening behind the scenes. No press conferences. No noise. Just calculated moves.

India is quietly reshaping its entire energy playbook.
In the next few days:

 
350,000 tonnes of LPG from the US will arrive.

Argentina is sending another 19,000 tonnes. India has already bought 31,000 tonnes in the first quarter of 2026, in comparison to 22,000 tonnes last year!

 
Fertilisers from Russia and Jordan are on the way for the farm and household sector.

 
And Russia? Still India’s biggest crude supplier despite all pressures from the US.

Iran Allows India, China and Turkey to Transit through the Strait of Hormuz

Imagine a 34-kilometre-wide waterway that carries about one‑fifth of the world’s oil, and then one country suddenly closes it to almost everyone. Post the Iran-Israel war, Iran has done this by blocking the Straits of Hormuz. Now, Iran is opening the Strait of Hormuz again, but only for select nations: India, China, and Turkey.

What does this really mean? It is not just a military move; it’s a deep‑rooted economic power play that will hit the global economy. In this high‑stakes economic game, India is right in the middle.

This isn’t just war news; it’s a textbook case of geopolitics shaping global supply chains, trade costs, and inflation.

Possible Fuel Crisis in India

Amidst the chaos of the Iran-Israel conflict and disruptions to supply chains due to Hormuz blockade, every nation is working around the clock to safeguard its interests and mitigate potential losses. Almost every country in the world is bound to bear the brunt of this war, whether in terms of diplomatic relations, economic relations, or both.

At present, the conflict appears one-sided, though Iran is giving a tough fight due to its strong foundation in ideology, unlike Venezuela. However, this war is still tilting decisively in favour of the combined forces of Israel and the United States. However, once this war concludes, the world will never be the same again. If the conflict remains conventional—and the US refrains from launching a nuclear strike against Iran—it is expected to be a protracted affair. Should the war drag on, President Trump could find himself politically hamstrung following the US midterm elections. This shift alone would fundamentally alter geopolitical dynamics. Within the realm of US domestic politics, very few are willing to align themselves with Donald Trump’s chauvinistic posturing regarding domestic and foreign policy matters. Consequently, once his political standing weakens or he is ousted from power, events are likely to shift rapidly once more, potentially leading to a global "reset."

Iran's Hormuz Blockade and Its Impact on Indian Exports

The Strait of Hormuz crisis poses a serious threat to India, given that its exports to the Gulf amount to 57 billion dollars. Oil imports are being disrupted, and shipments to Europe are being further delayed as fuel prices surge. This growing war may soon blow up the grocery bill!

Strait of Hormuz Crisis

The Strait of Hormuz crisis broke out on February 28 when the US and Israel conducted airstrikes on Iran, killing Supreme Leader Ali Khamenei, in Operation Epic Fury. Iran responded by launching missiles on US bases, Israeli cities, and Gulf countries such as the UAE and Bahrain, and shutting down the Strait on March 2, stopping maritime traffic. About 2.5 million barrels per day, which is 50% of India’s oil import, passes through the Strait of Hormuz primarily from Kuwait, UAE, Saudi Arabia and Iraq. This is driving oil and gas prices up in India.

Impact on Oil and Fuel Prices

India imports about 5 million barrels per day of oil from other countries, of which 2.5 million bpd passes through the Strait of Hormuz. This has made India’s situation vulnerable to continued blockade. The 40 per cent of the east-bound oil flows are blocked, and gasoline and diesel prices have soared 15-20 per cent since early March, driving inflation in transport and food prices.

Impact of Iran-Israel War on Indian Exports to Iran

India’s exports to Iran are now facing serious uncertainty because of the escalating conflict between Iran and the US-Israel Joint Force.

Iran has been an important market for Indian goods. In 2024, India exported products worth about 1.25 billion dollars to Iran. Indian exports include basmati rice, tea, sugar, pharmaceuticals, and electrical machinery.

But this war has disrupted these trade flows. Hundreds of thousands of tonnes of Indian basmati rice are currently stuck at ports or in transit, as shipping routes and insurance coverage have been disrupted.

Possibility of De-dollarization and its impact on the World

There has been a lot of hue and cry about De-dollarization post reckless tariffs imposed by the Trump Administration, but de-dollarization is still in the realm of rhetoric, and not in reality. The demand for US bonds is increasing, especially in the wake of the rise in geopolitical tensions and uncertainty.

Dollar's Enduring Dominance

The US dollar is the most dominant reserve currency in the world. It constitutes 58% of the total reserves. Presently, nearly 90% of the total Forex transactions are denominated in the US dollar. This is a position that has remained unchanged since the Bretton Woods agreement. Statistics indicate that the total amount of US bonds held by foreign countries has hit a record high of nearly $9.4 trillion by the end of 2025. Japan remains the largest creditor at $1.2 trillion end-2025, unchanged from 2020 levels, with many countries like the UK have increased their dollar holdings. De-dollarization efforts by the BRICS countries, fuelled by China and buzz-town in India, like the RBI's efforts to link digital currencies seems more like a media creation, and the efforts are yet to come to fruition. However, on the other hand, the policies adopted by President Trump are increasing the chances of diversification, fuelling the speculation about de-dollarization.

Iran is Strategically Less Important than UAE and Suadi Arabia for India

Every country in the world strives to maintain good relations with almost all countries, just as we strive to maintain good relations with our neighbors and relatives. However, when it comes to protecting interests and choosing partners among many, a country strives to maintain good relations with the country with which it has the greatest interest. A country that provides the lowest value is not significant and receives the last preference. India has relations with almost all the Middle East countries based on people migration and mutual trade.

Let's first talk about people. According to the Overseas Indians data of the Ministry of External Affairs of India, a large number of Indian citizens live and work in the Gulf and surrounding countries. This total number reaches around 9 million. Currently, the largest number of Indians are in the United Arab Emirates, with approximately 3,554,274. This is followed by Saudi Arabia, with 2,460,603 Indians. There are 9,93,284 Indians settled in Kuwait, 8,35,175 in Qatar and 3,23,908 in Bahrain. 6,84,771 Indians live in Oman. There are about 20,000 Indians in Israel. 16,897 Indian citizens live in Jordan, 17,100 in Iraq and 10,320 in Iran. Around 3,000 Indian citizens are registered in Lebanon, 3,141 in Egypt, 700 in Yemen, 97 in Syria and 11 in Palestine.

Middle East Crisis: It's Judicious Time than to Respond in Haste

Post the killing of Iran's Supreme Leader Ayatollah Ali Khamenei and his family in a US-Israeli led joint attack, the second phase of the US-led regime change effort in Iran has moved to the next stage. The first phase was to cause an internal protest against the Khamenei regime that had been gaining momentum in urban and rural Iran for months stirring Irani citizens in and outside Iran. Now, in the third phase, Iran's former dynasty, the Pahlavi dynasty, which still enjoys considerable support in Iran, will likely emerge in a leaderless Iran.

There is a claim that there is a three layered succession plan and Khamenei’s son me take over as final the Supreme Leader of Iran. However, this doesn’t sound fullproof. Ayatollah Khomeini was not father of Ali Khamenei as popularily believed. So even if there is a line of succession, there will be conflicts in absence of strong leadership. This will further worsen Iran's internal situation even, and the IRGC will be unable to control the situation even if it wishes to. It is quite possible that there will be internal conflict in the ranks and files of IRGC and it will possibly lead to collapse and split in the IRGC and a fanfiction being promoted by the US on the line of Taliban. It is quite possible post chaos, there will a factional which will try to capture Tehran the way Taliban did in Afghanistan.

Upset Over Narendra Modi's Israel Visit

India's secular intellectuals and media houses are outraged by the fact that Prime Minister Narendra Modi visited Israel. More than the Prime Minister's visit, they are upset by the fact that in his speech, the Prime Minister referred to Hamas as terrorist organization and the October 7th Hamas attack as a terrorist attack. Their displeasure is further compounded by the fact that the Prime Minister has agreed to several cooperation agreements to give a new dimension to India-Israel relations.

Well!

These people argue that India has changed its policy direction on the Palestine issue. India has always supported Palestine on the Palestine issue, but now India has retreated from that policy. These intellectuals continue to call this change in direction wrong.

Well, if this is the argument, then one question must be asked: what has India gained as a result of this one-sided support to Palestine?

Let's assume that Palestine is very poor and facing hardship. It has no technology or any special scientific achievements that could benefit India. No problem. Then, Palestine can at least support India on international forums and refrain from making negative comments on India's internal issues. India can certainly expect this much, and it's justified. But what is the reality?

Budget 2026 Calls for Stability in the Stock Market over Speculation

This is not a budget that aimed to kick-start the markets through speculative trading cycles or provides instant gratification to equity markets. Rather, it is a budget that has its heart set on long-term capital formation, real-sector productivity; focus on key areas of the future economy and a consequent rebalancing of the growth model in India to move away from the dangers of over-financialization.

The government has proposed an increase in the Security Transaction Tax (STT) on futures and options trading in the stock market in the Union Budget 2026. STT on futures has been increased from 0.02 per cent to 0.05 per cent, a 150 per cent increase over the existing rate. Similarly, on option trading, there is an increase from 0.1 per cent to 0.15 per cent on the sale of options (premium) and 0.125 per cent to 0.15 per cent on the sale of options(exercised). This triggered a sudden sell-off on Dalal Street on February 1, 2026, the Budget Day, following an increase in STT. This response by the market, at first, may seem to be counterintuitive but is, in fact, completely expected and in line with the long-term goals of the economy and the self-sufficiency of the stock market.

 
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