The conflict between the Middle Eastern nations of Palestine and Israel has led to massive destabilisation. Gulf countries like Saudi Arabia, the UAE, Qatar, and Oman have already disrupted their ties with Israel. But it is worth noting that Iran is also India’s strategic partner in the western Arabian Peninsula. 

“Iran vs Israel” is now on the news feeds of global media platforms, as Iran has issued a strong statement that suggests the country is heading for a war with Israel. Iran seems to be ready for a strike back on Israel after the latter killed 12 Iranians in a missile strike on the Iranian consulate general office in Syria. 

What does it mean for the Indian finance market? Let’s go ahead with this blog and find out!

Palestine: Reason Behind These Tensions

Israel is being criticised at the global stage for launching a ruthless attack on the Gaza strip. After Hamas launched a sudden rocket strike followed by land infiltration on the occupied west-bank, Israel responded back with a complete siege of the Gaza strip. What followed was not even expected by the United States, which is Israel’s top military ally. 

Israel launched waves of missile strikes on Gaza, ruthlessly killing thousands of Palestinians, including children and women. This made all the countries of the Arab league cut their diplomatic ties with Israel due to such actions that directly violate several peace conventions. 

The unjust siege of the Gaza strip prompted neighbouring states like Lebanon and Iran to intervene in the matter. While Hezbollah, the Lebanese militant group, launched direct attacks on Israel, the Iranian military didn’t undertake any such actions. Iran only made threats to Israel by telling them to stop the siege. 

Alleged Israeli Attack On Iranian Consulate Office

On April 1, in a suspected missile attack by Israel on the Iranian consulate general office in Syria, 12 Iranians, including security personnel and state representatives, were killed. This made Iran issue a statement that suggests it is preparing for a full-scale war on Israel.

Iran vs Israel: What Will Happen if the War Breaks Out?

The Impact On Oil Prices: 

Experts are predicting that if Iran and Israel come into a situation of war, then oil prices in the Asia Pacific region could easily reach above 100 USD. As one-fifth of the world’s oil production passes through the Strait of Hormuz, Iran could close it if they see it necessary to do so. This can destabilise oil transportation to India as well as other Asian countries. 

As India relies on oil imports for a massive 85% of its fuel requirements, the war can increase fuel prices sharply. The war will also create pressure of inflation on the global economy, which has already seen the tremendous effects of the Russia-Ukraine war.

Will It Affect the Indian Stock Market?

No, the war, if it happens, will not have a direct impact on the Indian stock market. It also won’t have a direct impact on the Indian financial market. But it is always good to know that wars have a “domino effect” too. As Iran has strong partners like Russia, which is always at odds with the USA, a larger conflict might take place. 

This will have the potential to directly affect the Indian financial market and could make a huge impact. So be sure to plan your exit strategy, as nobody has seen the future. Also, inflation fell for the first time below 5% in March, at 4.85%, since the past five months.

So, the war might have an indirect effect on the financial market in terms of inflation.

To Summarise

An escalation could impact global oil prices, which will indirectly affect India’s financial markets. The threat of inflation looms, influenced by disruptions in oil transportation and greater economic instabilities. The direct impacts on Indian stock markets can be minimal, but the effects of a larger conflict involving Iran’s allies could pose greater challenges to the Indian finance market.

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