Airlines and FMCG Firms Face Cost Pressures from Gulf Tensions

New Delhi, Jun 24 (KNN) Corporate India is closely monitoring the ongoing conflict between Iran and Israel, concerned about potential disruptions to crude oil supply and rising input costs.

While immediate business sentiment remains stable, industry leaders warn that a prolonged war in West Asia could trigger crude oil inflation, affecting manufacturing and freight.

Sectors such as oil & gas, aviation, auto, paints, FMCG, infrastructure, and fertilisers are particularly vulnerable, as they rely heavily on crude-linked inputs.

Paint companies, for instance, face high exposure, with 55-60 per cent of input costs tied to petroleum derivatives like solvents and resins.

Airlines may also suffer due to rising aviation fuel prices, which form 20-30 per cent of their operating expenses. Companies like Dabur are already adopting a cautious approach, anticipating that sustained tensions may lead to price hikes in consumer goods.

Petroleum-based raw materials like linear alkyl benzene (LAB), used in detergents, and high-density polyethylene (HDPE), used for packaging, could see price surges, impacting daily-use consumer items such as soaps, shampoos, and toothpastes.

Ajay Sahai, CEO of the Federation of Indian Export Organisations, warned of broader supply chain disruptions — not just in shipping, but also in air transport. Airlines, including Air India, Singapore Airlines, and British Airways, have already suspended flights over the conflict zone.

While some business leaders remain hopeful of only short-term impacts, others are more cautious. Experts predict freight rates on Red Sea-linked routes could rise by 10-15 per cent, especially since 40 per cent of India’s crude oil imports pass through the vulnerable Strait of Hormuz.

As global instability grows, corporate India remains in a “wait and watch” mode, hoping for quick de-escalation to avoid long-term economic fallout.

(KNN Bureau)