When Prime Minister Narendra Modi took to the podium in Hyderabad on a Sunday evening in May, what he said carried the weight of a wartime address. He did not announce subsidies or relief packages. Instead, he asked Indians to change how they lived. Work from home, he said, wherever possible. Take the metro. Carpool. Cut petrol and diesel use. Postpone foreign travel for a year. Defer gold purchases through the coming festival season. Reduce cooking oil consumption by 10%. Halve the use of chemical fertilisers and shift toward natural farming. Make a list of daily-use items, see how many were foreign, and replace them with Indian goods. The appeals were specific, granular, and personal. The Prime Minister framed them not as hardship but as patriotism. “Patriotism is not only about the willingness to sacrifice one’s life on the border,” he said. “In these times, it is about living responsibly and fulfilling our duties to the nation in our daily lives.”
However, the story actually begins in the Strait of Hormuz, which normally sees around a fifth of globally traded oil pass through its narrow channel on any given day. When ship movements there collapse by more than four-fifths, as they have in this crisis, it is not just a logistical hiccup but the largest single disruption to seaborne oil the modern market has seen. The immediate effect is a sharp jump in benchmark prices and volatility; the deeper effect is to force energy importers to rethink assumptions they have held for decades about the Gulf as a reliably open artery of globalisation.
Fertilisers and gas are where this disruption turns into food and inflation. Roughly half of global urea and sulphur exports and a substantial chunk of LNG cargoes are linked, directly or indirectly, to the routes now under threat. When those flows are squeezed, urea prices can easily rise to nearly double their pre-crisis levels and stay there through multiple planting seasons, as has happened since late 2025. The key insight is that this is not a one-off price spike: higher fertiliser costs today feed into lower application rates, potentially lower yields, and a rolling wave of food-price pressures that could last well beyond 2026.
Within the Gulf, the same shock yields divergent fates; it is a study in flexibility versus fragility. Producers like Saudi Arabia and the UAE, moving over 8 million barrels daily via alternative routes, have maintained exports and seen double-digit profit jumps. Conversely, smaller LNG-reliant exporters face double-digit GDP hits and multi-year repair timelines for ruined infrastructure. The lesson: energy security now depends as much on routing redundancy as on the reserves buried in the earth.
Europe’s vulnerability is a matter of starting position. After mild winters, gas storage slid to nearly 30%—low by recent standards. The sudden suspension of Qatari LNG pushed Dutch TTF prices above 60 euros per megawatt hour, twice the policymakers’ comfort zone. Europe remains highly sensitive; each spike squeezes households and accelerates the slow drift of heavy industry toward jurisdictions with cheaper, predictable power.
In the United States, numbers reveal a different burden-sharing; it is a trade-off of stability for risk. War expenditure has crossed 200 billion dollars, weapons output ramped up several times over peacetime levels. Yet, retail fuel prices remain consciously stable—implying government or corporate losses of hundreds of millions daily during peak intervention. The US uses fiscal space and balance sheets as shock absorbers; it trades near-term comfort for higher deficits and a rising medium-term recession risk.
For emerging markets, stress manifests in currencies rather than budgets. Over three billion people live where interest payments exceed spending on health or education. When oil and food both grow dearer, currency losses of 2-3% against the dollar and stock corrections of 10-12% can close access to affordable financing. Each external shock ratchets up vulnerability, making it harder to protect social spending without triggering inflation or a funding squeeze.
Beyond hydrocarbons, war creates new “micro-chokepoints” in critical minerals. Helium shipments for medical gear and chips are disrupted just as China tightens tungsten export controls; prices effectively tripled in months, spiking sharply in March 2026. Geo-economic competition now shifts toward narrow, indispensable high-tech inputs, prompting countries to broaden their strategic reserves.
The Gulf’s expat-driven, service-heavy model is straining; it is a fragile architecture now buckling under pressure. Estimated losses in travel and tourism run into hundreds of millions daily as visitors avoid the region and airlines reroute—meanwhile, insolvency filings in retail and construction have risen by well over half in some economies. For millions of foreign workers, this translates into a precarious risk of contract non-renewals and weaker remittance flows to South and Southeast Asia. The broader truth is that security perceptions can erase decades of soft-power branding with sudden, brutal efficiency, triggering knock-on effects in labour markets far beyond the region’s borders.
Shipping and insurance costs act as another quiet, yet powerful transmission channel. War-risk premiums for entering the Gulf have jumped by well over half; quotes once valid for two days are now revised within a single trading session. Simultaneous disruptions in the Red Sea push ships around the Cape of Good Hope—lengthening voyages and cutting Suez Canal revenues by double-digit billions of dollars. Global trade growth forecasts have slipped from robust mid-single-digits to closer to 2%; not because demand has collapsed, but because the routes themselves have grown longer, riskier, and more expensive.
At the macro level, these frictions manifest as a drag on world growth and a floor under inflation. Consensus projections for global GDP in 2026 have slipped from 2.9% to roughly 2.3-2.6%—a shift that seems modest on paper, yet represents hundreds of billions in lost output. A common rule of thumb suggests every sustained 10% rise in oil prices adds 0.4 percentage points to global inflation and trims 0.1-0.2 from growth; a relationship now starkly evident in the data. Advanced economies should slow sharply, while developing ones may maintain growth above 4%, albeit with tighter margins for social protection.
Against this backdrop, India’s numbers remain concise. In two months, foreign-exchange reserves fell nearly 40 billion dollars to under 700 billion, as the state pays more for oil and fertilisers while smoothing currency volatility. The fiscal deficit dropped from pandemic levels near 9% of GDP to the mid-4% range, even as defence allocations rose by over a quarter and food-fertiliser subsidies exceed 4 lakh crore rupees. Household taxes now account for 1½ percentage points more of GDP than in the late 2010s, though only 6% file returns. The main insight for Indian readers is that their experience—of costlier fertiliser, a watchful eye on the rupee, and a state that is tightening in some areas while still investing heavily in infrastructure—is one variant of a global pattern. Large importers everywhere are juggling reserves, fiscal space and social-sector priorities in response to the same external storm. Placing India as one case within that broader canvas, rather than as the centre of the story, allows you to use a few sharp figures to illuminate a much bigger question: how countries will share the costs of a world where chokepoints, minerals and shipping routes have become front-line instruments of power.
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Brijesh Singh is a senior IPS officer and an author (@brijeshbsingh on X). His latest book on ancient India, “The Cloud Chariot” (Penguin) is out on stands. Views are personal.
