New Delhi, March 20 (UNI) The ongoing West Asia crisis has so far failed to trigger a sharp correction in global financial markets, but risks to energy-dependent economies such as India could escalate if disruptions in the Strait of Hormuz persist, according to a report by Jefferies.
The report noted that markets have shown surprising resilience despite intensifying geopolitical tensions in the Middle East, stating that investors have largely held steady even amid “historic newsflow” from the region.
A key factor behind this stability is the continued flow of energy supplies through the Strait of Hormuz, a critical artery for global oil and gas shipments. The report highlighted that nearly 85 per cent of energy traffic passing through the strait is destined for Asia, with countries such as India, China and other South Asian economies accounting for around 60 per cent of these flows.
According to Jefferies, Iran’s decision to allow selective passage of ships has helped ease immediate supply concerns, thereby preventing a spike in market volatility. This controlled movement has reduced pressure on global energy supply chains in the short term.
However, the report cautioned that the situation remains fragile, particularly for energy-importing nations. It warned that any prolonged disruption or closure of the Strait of Hormuz could have severe and lasting economic consequences.
“Economic growth is energy consumed,” the report noted, underscoring the direct link between energy availability and growth trajectories. A sustained disruption could therefore weigh heavily on economies like India that rely significantly on imported energy.
From a broader regional perspective, Jefferies observed that markets have increasingly treated geopolitical shocks as temporary disruptions. Investors, it said, have grown accustomed to viewing such events as buying opportunities rather than long-term threats.
While the report did not single out India in detail, it flagged the country’s heavy dependence on energy flows routed through the Strait of Hormuz as a key vulnerability, especially in the event of oil price shocks or supply interruptions.
For now, continued energy transit and investor confidence are supporting market stability. However, the report emphasized that any escalation leading to a prolonged blockade or wider military conflict could act as a major trigger for volatility, potentially fuelling inflation and slowing growth across Asia, including India.
