The war involving the United States & Israel and Iran entered its fourth day on Tuesday, escalating tensions across the Gulf region. In a dramatic development, Ibrahim Jabari, senior adviser to the Commander-in-Chief of Iran’s Revolutionary Guards, claimed that the Strait of Hormuz has been closed, warning that any vessel attempting to pass through would be targeted by Iranian forces and set ablaze.
At its narrowest point, the Strait of Hormuz is just 33 kilometres wide. It serves as a critical maritime corridor linking Saudi Arabia, Iran, Iraq, and the United Arab Emirates to the Gulf of Oman and the Arabian Sea. The waterway carries nearly 20 percent of global crude oil trade, and almost half of India’s crude oil imports transit through this route. It is equally vital for the movement of several other commodities.
Experts caution that prolonged disruption in the region could severely impact India’s edible oil imports, potentially pushing up domestic prices. However, higher edible oil prices may benefit mustard farmers, who could realise better returns in the coming months.
Import Dependence and Price Trends
Atul Chaturvedi, Executive Chairman of Shree Renuka Sugars and former President of the Solvent Extractors Association of India (SEA), said palm oil currently accounts for nearly 50 percent of India’s edible oil imports, while soybean and sunflower oils make up the remaining half.
He noted that palm oil prices are hovering around $1,140 per tonne (C&F), sunflower oil at $1,400–1,425 per tonne, and soybean oil at about $1,250 per tonne.
India meets around 60 percent of its edible oil demand through imports, purchasing roughly 16 million tonnes annually. Sunflower oil alone accounts for about 20 percent of total imports. Palm oil is primarily sourced from Indonesia and Malaysia; soybean oil from Argentina, Brazil, and the United States; and sunflower oil from Russia and Ukraine.
A significant portion of these shipments passes through the Strait of Hormuz and the Suez Canal. If vessels are forced to reroute away from the Red Sea, supply delays are likely. Chaturvedi estimates that diversion could raise the landed cost of soybean and sunflower oil by about $50 per tonne.
He added that any shortage in soybean and sunflower oil supplies would likely boost demand for palm oil, pushing its prices higher. At the same time, the arrival of India’s mustard crop could support domestic farmers amid rising edible oil prices.
Domestic Market Impact
The Indian Vegetable Oil Producers’ Association (IVPA) stated that tensions between the US-Israel and Iran have a direct bearing on India’s crude and edible oil markets. Rising crude oil prices not only increase logistics costs but also fuel inflationary pressures due to the linkage between edible oils and global biofuel markets. Additionally, heightened geopolitical risks could lead to higher marine insurance premiums. Given India’s heavy reliance on imports, any global supply chain disruption may quickly transmit into domestic price volatility.
According to SEA data, India imported 3.878 million tonnes of edible oil during November-January of the 2025-26 oil year (November-October), slightly lower than 3.921 million tonnes in the corresponding period last year. Sunflower oil imports stood at 0.762 million tonnes during this period.
Oilmeal Exports Also at Risk
The conflict may also affect India’s oilmeal exports. Around 65 percent of shipments go to Southeast Asia, 20 percent to West Asia, and 15 percent to Europe.
During April-January 2025-26, India exported 3.235 million tonnes of oilmeal, down from 4.342 million tonnes in the same period of 2024-25. Exports to West Asia during this period totalled 0.443 million tonnes. A prolonged conflict could disrupt both logistics and demand in key export destinations, further impacting trade flows.