Gulf Tensions Threaten Global Trade, May Spike Shipping Costs by 20 Days

SC Ralhan, President of FIEO, said the ongoing conflict has already begun to alter established trade routes.

"The ongoing conflict has already begun to disrupt established global logistics channels. Air routes are being altered, and maritime trade through the Red Sea and key Gulf straits faces heightened uncertainty. If diversions become prolonged, shipments may increasingly have to reroute via the Cape of Good Hope, adding an estimated 15-20 days to transit time for Europe and the United States. This will inevitably raise freight costs and stretch supply chains," said Ralhan in an official statement.

FIEO said rising geopolitical risks could increase insurance and energy costs, adding pressure on exporters and the Rupee.

"In addition, heightened geopolitical risk typically results in higher marine insurance premiums, further adding to transaction costs for exporters. A prolonged disruption could also exert upward pressure on global energy prices, with consequential implications for input costs and currency stability, including pressure on the Rupee," FIEO observed.

The FIEO Chief further said sustained instability in key trade corridors would need close monitoring and policy support to maintain exporters' competitiveness.

"While Indian exporters have demonstrated resilience in navigating past disruptions, sustained instability in these critical trade corridors would warrant close monitoring and calibrated policy support to maintain competitiveness," the FIEO chief added.

The remarks come amid a sharp escalation in West Asia after joint military strikes involving Israel and the United States targeting Iranian sites, triggering retaliatory threats and the closure of airspace in Iran, Israel and Iraq. The developments have disrupted key international air corridors used by airlines operating between India and Gulf nations.

Airlines across the country have been forced to reroute or cancel flights, with airports setting up help desks to assist stranded passengers. Both Air India and IndiGo said they remain in close coordination with aviation authorities and are monitoring the situation round-the-clock.

Services will resume once safe flight corridors become available, the airlines said, urging passengers to stay updated through official channels as the situation evolves.

Meanwhile, Iran's Foreign Minister Seyed Abbas Araghchi on Saturday said that the US and Israel's attack against his country is "unprovoked, illegal and absolutely illegitimate. Araghchi justified Iran's retaliatory strikes against Israel and US military bases as an "act of self-defence", which he said is "absolutely legal and legitimate," Reuters reported.

"This attack was unprovoked, illegal and absolutely illegitimate and against international law and should be condemned. We are attacking military bases in the region as an act of self-defence. What we are doing is an act of self-defence, which is absolutely legal and legitimate," Araghchi said, according to Reuters.

Iran's Defence Minister Amir Nasirzadeh and Revolutionary Guards commander Mohammed Pakpour are believed to have been killed in an Israeli strike, according to sources familiar with Israel's military operations, and another regional source, Reuters reported.

Nasirzadeh was the Deputy Chief of Staff for the Iranian Armed Forces before taking charge as the Minister of Defence. The Minister began his military career as a fighter pilot.

Pakpour had assumed charge of the Islamic Revolutionary Guard Corps (IRGC) in 2025, after the death of the previous commander, Hossein Salami, following Israeli strikes.

Araghchi earlier alleged that the Israeli strike on an Iranian primary school for girls murdered dozens. Araghchi vowed to answer the strikes.

In a post on X, he said, "The destroyed building is a primary school for girls in the south of Iran. It was bombed in broad daylight, when packed with young pupils. Dozens of innocent children have been murdered at this site alone. These crimes against the Iranian People will not go unanswered."

Iran has retaliated, targeting Israel and US assets in some Gulf states. Multiple explosions have been heard in Iran's capital, Tehran, while blasts have also been reported in several other locations across the country.

- ANI