Handshake Diplomacy Won’t Shield India from Rising Oil Prices

The diplomatic handshake between Indian Prime Minister Narendra Modi and Iranian President Masoud Pezeshkian may have generated warm optics, but it is unlikely to mitigate the economic fallout of the ongoing Middle Eastern conflict. The simmering tensions between the US and Iran continue to grip the region, with oil prices surging in response.

As Pezeshkian met with Indian leaders, he reaffirmed his country’s stance against what he called “bullying arrogance,” a direct rebuke of US President Donald Trump’s assertion that Iran would have launched devastating attacks on Israel and the Middle East if not for Washington’s military intervention. The Iranian president’s defiance is unlikely to reassure investors or stabilize global energy markets.

The impact of the conflict on India cannot be overstated. As the world’s fastest-growing major economy, it relies heavily on imported fuel, with nearly 85% of its needs coming from foreign sources. The critical Strait of Hormuz, which separates Iran and Oman, has been a chokepoint for oil shipments since February, when trade ground to a near-halt.

The July attack on two Indian vessels in the Strait of Hormuz is a stark reminder of the human cost of this conflict. Ten seafarers have lost their lives since the war escalated, and many more are stuck at sea, waiting for safe passage. While Modi’s appeal for dialogue and diplomacy is understandable, it remains unclear what concrete steps India can take to mitigate the impact of this crisis.

The BRICS Summit in New Delhi has highlighted the economic interdependence between participating nations. However, the Middle Eastern conflict threatens to upend this delicate balance. As energy prices continue to rise, India’s growth story may be placed under further strain. The government will need to weigh its diplomatic efforts against the pressing need for a stable energy supply.

In the short term, Indian consumers can expect higher fuel prices and potentially even more frequent disruptions to shipping routes. This is a sobering reality that policymakers must acknowledge as they navigate this complex web of international relations. As Pezeshkian’s words suggest, Iran will not yield easily, but neither should India underestimate the economic costs of its diplomatic choices.

The handshake between Modi and Pezeshkian may have made headlines, but it is a fleeting moment in an increasingly turbulent region. What matters now is how India positions itself to weather the economic storm that is brewing. As the US-Iran standoff shows no signs of easing, India must consider its own interests and develop a contingency plan for the long-term instability in the Middle East.

The BRICS Business Forum may have provided a platform for diplomatic handshakes, but it will not shield India from rising oil prices or the human cost of conflict. As the situation continues to unfold, one thing is clear: the stakes are higher than ever, and India’s economic resilience will be tested like never before.