4 min readMar 30, 2026 07:01 AM IST First published on: Mar 30, 2026 at 06:15 AM ISTI was first introduced to the petroleum business 50 years ago when I commenced my graduate thesis on Iran’s trade policy with a focus on the barter of crude oil for other commodities. The thesis made me appreciate the intricacies of petroleum pricing, and I have since limited my answers to questions on the trajectory of oil prices to three words. I don’t know. This is because the trajectory of prices is determined by six factors, of which only three lend themselves to quantitative rigour — supply, demand and exchange rates. The other three — geopolitics, speculative trade and idiosyncratic leadership — are driven by subjective sentiment.In a similar vein, this article is no more than reflections on the “off-ramp” ramifications of the current conflict. US President Donald Trump went into this war with a mix of objectives, but one statement has been heard more often than others — “regime change”. He may well achieve this objective, but not quite in the way he meant it. His objective was regime change in Iran. What he may have triggered is a process of regime change elsewhere. In time, high oil prices, supply chain disruptions and recession could erode public support for governments elsewhere. It would be ironic if the theocratic regime in Iran survives but the Republican Party loses its hold over the US Congress in November in a prelude to the loss of the presidency in 2028, Israeli PM Benjamin Netanyahu finds himself back in the dock struggling to avoid jail, and the Gulf monarchs who host American air bases witness an outbreak of public protest against Western intervention.AdvertisementThe bombs will stop falling sooner rather than later. But will that mean the end of “war”? Yes, in the conventional sense. But not if the meaning is stability. The Rubicon has been crossed. West Asia will not be stable for a long time. Thousands have lost families and homes. Many will live for one purpose — revenge.The conflict has highlighted the asymmetries generated by technology. Drones worth $50,000 pitted against multimillion-dollar interceptors, with the former gaining the upper hand in the war of nerves. The conflict has established that sophisticated weaponry is no guarantor of security. It has also brought into focus the effectiveness of nuclear weapons as deterrents. Iran’s capability to produce such weapons may have been “obliterated” but I suspect it is now more determined than ever to develop them. Israel will not permit this, and the cycle of hot conflict and cold war will persist. More worryingly, so-called middle powers like Japan, South Korea and Brazil may decide they should contemplate developing a nuclear arsenal. In such an outcome, Operation Epic Fury would morph into an epic catastrophe.India is possibly the worst affected by this conflict. Simple maths will indicate the severity of this impact. We import approximately 5 million barrels of crude oil of varying qualities every day, of which around 3 million barrels are sourced from West Asia. The average per-barrel price of the latter (Dubai benchmark) in February was $70/barrel. The current spot price is around $160/bbl. The incremental import cost is $90/bbl or $270 million every day. In addition, we import LNG, LPG, fertilisers and sulphur — the prices of which have also ratcheted up. The consequential stagflationary impact will be compounded by a slowdown in FDI. Amazon and Google may well review their plans to invest in energy-intensive data centres.AdvertisementThe crisis compels reflection on what we must do to manage and mitigate our vulnerability. Our buildup of strategic petroleum reserves has not been enough. We must create additional caverns and fill them. We have taken impressive strides in green energy development. More than 50 per cent of our installed electricity capacity is from renewables. However, much of this capacity is underutilised because of the inadequacy of smart transmission grids, battery storage and smart meters. Investment in these areas must be deepened as also in the electrification of transport and household heating.you may likeFinally, we must turn Mumbai, Delhi and possibly Bengaluru into international aviation hubs in competition with airports in the Gulf states. The threat of airspace closure in West Asia will not dissipate even after “normalcy” returns. The necessary infrastructure and policy should be developed without delay.The writer is chairman and distinguished fellow of CSEP Research Foundation