The tensions between Iran and Israel in 2026 have escalated into a significant crisis, marked by the potential for “largest ever” oil supply disruptions, extensive damage to regional infrastructure, and serious health hazards due to toxic pollutants. This conflict has triggered global inflationary trends, financial strain, and concerns over energy security, while also inflicting enduring and possibly irreversible harm to ecosystems and air quality throughout the Middle East.
Global spillovers and emissions
The Strait of Hormuz, which accounts for nearly one-fifth of the world’s oil supply, lies at the center of this crisis. Any prolonged disruption in this area not only results in a supply shock but also economic and environmental instability. As reported by the International Energy Agency and various independent evaluations, such disruptions could lead to a decrease in supply by 7 to 8 million barrels per day, and have already compelled major LNG exporters to invoke force majeure. With Brent crude approaching 140 dollars per barrel, cost-push inflation is escalating, potentially increasing the global Consumer Price Index (CPI) by 1–2 per cent, while the IMF’s global growth projection for 2026 of 3.1 per cent may decline to 2 per cent.
The environmental costs are mounting alongside the economic ones. Early estimates suggest that the first weeks of the conflict and associated attacks have already released several million tonnes of carbon dioxide, more than the annual emissions of some smaller economies, due to fuel intensive airstrikes, deployments, and burning infrastructure.
As ships are rerouted and militaries burn more fuel, the conflict risks locking in tens of millions of tonnes of extra CO₂, further eroding the remaining global carbon budget for 1.5 degrees and making it even harder to reach within the 1.5–2°C range set under the Paris Agreement.
India’s triple vulnerability: Energy, health, and climate
The crisis is especially acute for India. Nearly 89 per cent of its crude oil is imported, so even a 10 dollar rise in oil prices substantially enlarges the import bill. Current price levels could add 10–15 billion dollars in extra costs, raising fuel prices and pushing inflation up toward 7 per cent, as, India’s strategic petroleum reserves offer only a temporary buffer against sustained disruptions. At the same time, escalating fertilizer prices, largely dependent on Middle Eastern inputs, jeopardize agricultural production and rural livelihoods, increasing food insecurity and health vulnerability in already stressed farming systems.
There is also a deeper structural risk. In response to supply disruptions, countries may revert to cheaper, more carbon-intensive fuels, delaying the global transition to cleaner energy. For India, where a large share of energy still comes from fossil fuels, this creates a difficult trade-off between short-term energy security and long-term climate commitments.
The fallout from this crisis is already manifesting in the form of disruptions to essential supply chains, with significant health implications. The situation in and around Hormuz has, for instance, contributed to a global helium shortage. This is tied to production limitations in Qatar, which in turn threatens India’s MRI diagnostics; helium is, after all, essential for cooling superconducting magnets. At the same time, the petrochemical sector is experiencing disruptions that are driving up the cost of key medications. Paracetamol, amoxicillin, and metformin are all affected, with prices for Active Pharmaceutical Ingredients (APIs) climbing sharply and wholesale drug prices increasing by 10–15 per cent. Medical devices are also feeling the strain. The costs of plastics used in syringes, catheters, and other disposables have surged, in some cases by as much as 50 per cent. Furthermore, rising diesel and electricity prices are squeezing profit margins and causing delays in the supply chain.
India’s healthcare system is highly exposed to global energy and logistics disruptions, where interruptions translate directly into higher costs and reduced access for patients. Hospitals have also reported a 50–75 per cent decline in international patients from West Asia (including Iran, Oman, Saudi Arabia, Iraq, and Yemen) due to flight cancellations and airspace restrictions, leading to revenue losses of 15–20 per cent in March 2026.
Roadmap
First, India must prioritise medical energy security. A dedicated allocation from strategic fuel reserves should be ring fenced for healthcare, ambulances, oxygen plants, and critical hospital infrastructure, taking precedence over non essential consumption in times of scarcity. In parallel, hospitals and primary health centres need to move towards hybrid, low carbon energy systems, combining rooftop solar, storage solutions, and energy efficient equipment.
Second, India’s current petroleum reserves remain insufficient for prolonged disruptions. Negotiating bilateral “hot tap” arrangements with partners such as the US, UAE, and Brazil to increase effective coverage to around 30 days through rapid offshore swaps can enhance resilience.
Third, the Hormuz disruption underscores the fragility of concentrated trade routes. India must accelerate alternative trade corridors, integrating ports, rail, and inland logistics, to reduce exposure to single chokepoints.
Fertilizer supply disruptions should be addressed proactively through diversified sourcing, greater use of organic and low carbon inputs, and incentives for efficient application to prevent agricultural shocks that can cascade into nutrition and health crises. More broadly, each energy security measure should be evaluated for its climate footprint, ensuring that short term fixes do not lock India into high carbon pathways just as the window for limiting global warming is narrowing.
Conclusion
The Iran–Israel conflict transcends geopolitics: it stress tests the global economic order, public health systems, and the world’s already fragile climate. Its ripple effects are being felt across energy markets, financial systems, households, and the atmosphere, as war related emissions, shipping disruptions, and fuel switching add fresh pressure to an overheating planet. For India, the imperative is both immediate and strategic. Proactive choices made today in energy, trade, and diplomacy will shape resilience not only in this crisis but in a more turbulent world ahead. In our globally interconnected era, wars do not redistribute prosperity; they erode it.