Disruptions to shipping through the Strait of Hormuz have choked global energy flows, tightening supply and raising risks to growth and inflation, India’s March 2026 Monthly Economic Review said.

Ship transits have fallen to about one vessel a week from 200-300 earlier, constraining hydrocarbon movement and pushing up energy and logistics costs, the government’s Economic Division said.

Crude oil prices doubled over a short span, while freight costs surged due to higher tanker rates, bunker fuel prices and war-risk insurance premiums.

The report said the shock is transmitting through energy and logistics channels, with risks to growth “skewed to the downside.”

“The fundamental problem is a simultaneous double squeeze - no crude coming in, and no product going out,” the report said, warning refinery shutdowns and storage constraints could delay recovery.

The Strait handles around one-fifth of global seaborne oil trade and significant volumes of liquefied natural gas and fertilisers. 

About one-third of global seaborne fertiliser trade passes through the route, adding pressure to agricultural input costs.

For India, the impact is being felt through higher import prices, supply disruptions, rising logistics costs and potential moderation in remittances.

Economic activity remained robust up to February, but early signs of moderation have emerged. E-way bill generation fell 5.3% month-on-month up to March 22, while flash PMI estimates indicated softer output growth. Vehicle registrations rose 19.1% year-on-year.

Retail inflation rose to a 10-month high of 3.21% in February from 2.74% in January, driven by food prices. Food inflation stood at 3.35%, led by fruits (8.63%), edible oils (7.37%) and animal proteins (4.97%). Vegetable prices rose 2.8%, driven by a 45% increase in tomatoes.

Industrial output showed mixed trends. Core sector growth was 2.26% in February, with crude oil output down 5.2% and natural gas down 5.0%. Steel output rose 7.2% and cement grew 9.3%.

On trade, merchandise exports fell 0.8% year-on-year in February, while imports rose 24.1%, widening the deficit to $27.1 billion from $14.4 billion a year earlier. Services exports rose 24.9% to $39.5 billion, covering 85.4% of the merchandise gap.

For April-February FY26, total exports rose 5.8% to $790.9 billion, while imports increased 7.4% to $900.5 billion, widening the deficit to $109.7 billion.

The current account deficit stood at 1.3% of GDP in Q3 FY26. Portfolio outflows totalled about $12.5 billion in March, while the rupee weakened to 93.88 per U.S. dollar on March 24.

The government has approved a 497 crore rupee support package for exporters to offset logistics disruptions.

Foreign exchange reserves remain sufficient to cover more than 11 months of imports, the report said. 

Source: Investing.Com

#theshippingtribune #latestnews #shippingnews #dailynews #Maritimenews #shippingindustry #news #media #newsupdate #maritime #shippingnewsworldwide