Iran War Triggers Global Oil Shock and Indian Economic Crisis

A conflict between Iran and the United States, which began on February 28, 2026, has triggered a severe global economic crisis centered on the blockade of the Strait of Hormuz. In Iran, the war and a three-month internet blackout have pushed inflation to nearly 54%, causing the price of basic necessities to rise by 50%. To stabilize the domestic situation, the government of Masoud Pezeshkian increased the minimum wage by 60% and made public transit free in Tehran. Pezeshkian has urged officials to be honest about these struggles while maintaining that the nation's dignity will not be sacrificed for comfort.

India, the world's third-largest oil importer, is facing the worst oil supply disruption in history. The blockade has driven oil prices up by approximately $30 per barrel, causing the Indian rupee to hit an all-time low against the U.S. dollar and increasing India's oil-and-gas import bill by 53% in April. In response, the Government of India has cut fuel taxes, curtailed gold imports, and shifted import sources to Russia, Venezuela, and Brazil.

To mitigate the financial fallout, the Reserve Bank of India introduced measures on June 5 to stabilize foreign exchange reserves and protect the rupee. Despite these interventions, analysts have downgraded India's growth projections from 7.7% to 6.6%, warning that inflation may average 5.1% by March 2027. Both Iran and the United States remain deadlocked in efforts to reach a deal to end the hostilities.