The ongoing conflict in West Asia could trigger a wide-ranging impact on Indian corporates, from supply chain disruptions and fuel shortages to inflationary pressures and capital reallocation, according to India Ratings and Research.

The agency said the immediate fallout is largely cost-driven, with sectors such as logistics, chemicals, fertilisers, cement, ceramics, city gas distribution (CGD), and oil marketing companies (OMCs) at risk. Petrochemicals may see near-term gains while renewable energy could benefit over the medium to long term amid a push for energy security.

Ind-Ra noted that the immediate credit impact is likely to be more pronounced for entities rated ‘IND BBB and below’, while higher-rated corporates have buffers to absorb short- to medium-term disruptions.

Macroeconomic pressures to intensify

The agency warned that sustained high oil prices could strain India’s current account deficit and currency through imported inflation. The Reserve Bank of India may face challenges in balancing tighter financial conditions with growth.

A prolonged disruption could dampen consumption, increase the fiscal burden via higher fertiliser subsidies, and delay the recovery in private investment.

Logistics hit by route disruptions

The logistics sector is expected to be the first to absorb the shock, with rising costs seen as inevitable. With the Strait of Hormuz nearly inactive, cargo movement has slowed significantly.

While most Middle Eastern ports remain technically open, vessel traffic has dropped sharply, with limited activity at key hubs such as Jeddah and King Abdullah. Freight rates have surged due to emergency levies, bunker charges, and air-freight fuel surcharges. Some global carriers are adopting hybrid models to sustain supply chains.

Oil & gas sees mixed impact

Within oil and gas, the impact is uneven:

Petrochemicals: After a weak 2025 cycle, profitability is expected to improve sharply, with widening spreads and inventory gains boosting March-quarter earnings.

CGD: While CNG and domestic PNG supplies remain protected, industrial and commercial users face reduced gas availability. Stronger balance sheets are expected to support resilience.

OMCs: Despite strong diesel cracks, marketing margins remain under pressure due to incomplete pass-through of higher crude prices. Government support is likely to cushion credit profiles.

Chemicals, fertilisers under stress

The chemicals sector faces feedstock shortages and price volatility. Commodity producers are better placed to pass on costs, while specialty players face pricing constraints. Shortages of key inputs such as methanol, ethylene, and naphtha may lead to partial shutdowns if disruptions persist.

The fertiliser sector is particularly exposed, as natural gas serves as both feedstock and fuel. Prolonged supply constraints could increase imports and raise subsidy requirements by ₹50,000–60,000 crore.

Cement sector faces cost pressures

Ind-Ra said cement producers, especially tier-2 players, may see margin pressures due to rising fuel and freight costs. Power, fuel, and logistics account for nearly half of production costs, making the sector vulnerable to imported energy price volatility.

While large players with diversified fuel sources may remain relatively insulated, smaller firms could face EBITDA compression and potential credit stress if disruptions continue.

Renewables emerge as long-term beneficiary

The renewable energy sector could benefit over the longer term as India accelerates efforts to reduce dependence on imported fuels. High liquefied natural gas prices are improving the viability of alternatives such as green hydrogen.

As industries shift towards electrification and diversify energy sources, renewable capacity—particularly solar—is expected to gain, creating a multiplier effect across the energy ecosystem.