Gulf Conflict Reignites Global Anxiety

By Govindraj Ethiraj

For those of us old enough to remember the 1990 Gulf War, the current moment feels eerily familiar.

That conflict was the first true television war, beaming graphic images of guided missiles and live trench coverage straight into our living rooms.

It began when Iraq, then ruled by Saddam Hussein, invaded and occupied neighboring Kuwait. A coalition led by the United States served an ultimatum for Hussein to withdraw by January 1991. He refused, and the rest is modern history.

Hussein personally survived the 1991 retaliation by the US-led forces, but his regime could not survive the second American invasion in 2003—a conflict predicated on widely contested claims of weapons of mass destruction, which kept US forces engaged until 2011.

Fast forward to March 2026, and the geopolitical theatre has shifted.

From Talks To Strikes

The US and Israel have launched strikes against Iran. The precise reason for the timing of the attack remains opaque.

Until recently, several reports suggested that negotiations between Washington and Tehran—aimed at curbing Iran’s nuclear program—were progressing well. Some reports even suggested a conclusion that would have been agreeable to the United States had been reached.

In retrospect, it appears those diplomatic channels may have been a smokescreen, providing US-led forces the time to maneuver into formation even as the broader Middle East braced for an imminent clash.

Airspace Shuts, Tensions Rise

What the wider region, including the Emirates, clearly did not anticipate was the sheer scale of the collateral expansion. Bombs and interceptor debris have rained down on Manama, the capital of Bahrain, Dubai, Abu Dhabi, Doha, and Kuwait.

Tehran’s grim strategic logic dictates that all US military bases are legitimate targets, regardless of geography.

That sweeps up major air bases in or adjacent to these cities, as well as the headquarters of the US Navy's Fifth Fleet in Bahrain, which oversees the Gulf, the Red Sea, and parts of the Indian Ocean.

Whether by direct targeting or as a consequence of mid-air interceptions, the fallout has literally struck the heart of Dubai. Projectiles have impacted locations ranging from the iconic Burj Khalifa to a beachfront hotel in Jumeirah.

As it stands, commercial aviation into and out of most of the Middle East is suspended.

The economic cost of an airspace, airport and airline shutdown, now stretching beyond 48 hours - will be staggering.

The inconvenience caused to hundreds of thousands of transiting passengers—many of whom remain stranded across various global hubs—is incalculable.

There is no immediate end in sight. Iran has confirmed that its Supreme Leader, Ayatollah Ali Khamenei, was killed in his office on Saturday morning during the US-Israeli attack, though a succession plan appears to be in place.

War’s Oil Shock

Military history also teaches us that there is a strict limit to what aerial bombardment alone can achieve.

The threat of Iranian missile reprisals will thus linger, as will anxieties regarding maritime transit through the Strait of Hormuz.

So it does feel like the 1990s all over again, including that dreaded feeling at the pit of the stomach about what tomorrow might bring.

During the Gulf War, oil prices doubled from $20 to $40 a barrel by the way.

Oil prices will undoubtedly jump when the markets open this week, though a full doubling is unlikely given currently robust global supply and softening underlying demand.

Expect gold and silver prices to shoot too even as stock markets fall.

Where Does This Leave Us?

India, for one, is in a vastly different place today than it was during Desert Storm.

New Delhi began opening its economy at almost the exact moment the Gulf War commenced.

By dismantling the stifling licensing regime and embracing market liberalisation, Indian industry grew vastly more competitive and capable than it had been in previous decades.

Tariffs in India fell steadily for 13 years until 2014, before protectionist instincts crept back in.

Now, spurred by pressure from the United States and impending free-trade agreements with the European Union and the United Kingdom, those tariff barriers are set to fall once again.

The medium- and long-term impacts of the strike on Iran remain clouded in the fog of war and many consequences are impossible to predict.

Resilient, But Vulnerable

The coming weeks, if not months, will be difficult for India and Indians, around 9 million, who live in and depend on the Middle East for their livelihoods.

India approaches this crisis stronger and more resilient precisely because it is, despite recent hurdles, an open economy.

Crisis always leads to reform in India but waiting for them to drive internal change is not the best way of doing things either.

In the last year, it was a global trade war that rang the reform bells for the Indian economy.

Now, it is just war.

Gulf Conflict Disrupts Energy, Shipping, Flights

The rapidly widening conflict is currently triggering a significant disruption in global economies. China’s Foreign Minister Wang Yi has condemned the US and Israeli strikes on Iran as "unacceptable.” Meanwhile, Pope Leo expressed "deep concern", making an impassioned appeal for world leaders to halt the "spiral of violence" before it consumes the region.

Turmoil In Energy Markets

With 20% of the world’s liquefied natural gas (LNG) traveling through the Strait of Hormuz, the region remains a vital supply route for global energy. This crucial chokepoint is now at a standstill, with ship-tracking data showing that LNG trade through the narrow waterway has all but halted, Bloomberg reported.

Asian buyers, who rely on Qatar for roughly a quarter of their LNG supplies, are urgently contacting alternative suppliers to secure backup cargoes.

Impact On Shipping

In a move to stabilise trade concerns, Adani Ports and SEZ Ltd (APSEZ) issued a statement on Sunday regarding the status of the Haifa Port in Israel. The company confirmed that all employees are safe and that the port’s infrastructure and assets are fully secure and operational.

Despite this reassurance, the broader shipping environment remains paralyzed. Oil and gas transit through the Strait of Hormuz stays largely paused as Iran increases its threats to vessels in the waterway. While a few vessels were observed trickling out of the strait on Sunday, no ships appeared to be entering, and a sanctioned oil tanker was reportedly targeted off the coast of Oman, Bloomberg reported.

Flight Operations Suspended

The instability has also caused severe disruptions to international aviation. India’s double Olympic medalist PV Sindhu was among thousands left stranded at Dubai International Airport on her way to the All England Open badminton tournament.

In India, a total of 350 flights operated by Indian domestic carriers have been cancelled on Sunday.

The Ministry of External Affairs has issued an advisory for all foreign nationals currently in India whose travel plans have been disrupted by the escalating conflict.

Meanwhile, the geopolitical tension is having an immediate impact on global finance, as investors shift toward safe-haven assets such as gold, the Swiss franc, and US Treasuries.

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Rs 2.18 lakh crore

That’s the amount wiped off the combined market capitalisation of India’s 10 most valued companies last week, as weak sentiment dragged equities lower. The BSE benchmark fell 1,527.52 points, or 1.84%, during the period.

Top Three Losers:

• Reliance Industries: Lost Rs 76,641 crore

• Tata Consultancy Services (TCS): Lost Rs 41,158 crore

• ICICI Bank: Lost Rs 35,349 crore

The broad-based selloff reflected caution among investors amid global uncertainties and sustained foreign fund outflows. Weak cues from global markets further dampened domestic sentiment.

Pivot: Hindustan Unilever (HUL) stood out as the only gainer among the top 10 firms. The FMCG major added Rs 8,828 crore to its market valuation, taking its total market capitalisation to Rs 5.61 lakh crore.

Analysts attributed the overall decline to persistent geopolitical tensions and pressure on technology stocks globally, particularly amid concerns over artificial intelligence-led disruption and stretched valuations. The weakness in heavyweight counters amplified the fall in headline indices, even as select defensive stocks provided limited support.

The Lead: Overall, the week underscored the fragility of investor confidence in the face of global headwinds and sector-specific pressures.

The Pioneer presents India Finance & Innovation Forum 2026 convenes policymakers, regulators, financial institutions and industry leaders to examine India’s evolving financial architecture. Over three days, senior decision-makers will explore fiscal and monetary priorities, capital markets, digital finance and innovation-led growth through focused dialogue, networking and collaborative sessions on what’s changing, what works and what comes next.

Revenue Resilient

India’s gross Goods and Services Tax (GST) collections rose 8.1% year on year in February 2026, pointing to steady economic activity despite last year’s rate cuts. Data from the Ministry of Finance showed gross GST revenue at about Rs 1.83 lakh crore for the month.

Catch Up Quick: In 2025, the GST Council cut and simplified several tax rates, moving many goods into lower slabs to support consumption. Despite those cuts, collections have continued to rise.

By the Numbers: The increase likely reflects higher sales volumes, better tax compliance and steady price growth, which together helped offset the impact of lower tax rates.

Car Sales Up In Feb

Major passenger vehicle makers reported a growth in domestic dispatches to the dealers during February, following sustained demand. India’s largest carmaker, Maruti Suzuki, reported marginal growth, with dispatches rising to 1.61 lakh units from 1.60 lakh a year earlier.

Overview: Maruti’s mini car volumes remained flat, while compact cars and utility vehicles registered growth compared with February 2025. The company has been calibrating production to reduce waiting periods across models.

Setup: Among peers, Hyundai posted a 10% increase in wholesales to 52,407 units. Tata Motors reported a 34% jump to 62,329 units, while Mahindra & Mahindra recorded domestic sales of 60,018 units.

It Keeps Getting Hotter!

India will see a hotter-than-usual summer, including more heatwave days, the India Meteorological Department (IMD) said on Saturday, Feb 28. 

Setup: The weather office expects maximum temperatures to remain above normal across large parts of northwest, central and eastern India in the coming weeks, with some regions recording departures of 3 to 5°C above average. It also expects minimum temperatures in March to stay above normal across most of the country, limiting nighttime relief.

Origin: This February ranked as the fifth warmest since nationwide records began in 1901, with both day and night temperatures significantly above the long-term average.

Impact: The heat threatens winter-sown crops such as wheat, rapeseed and chickpeas. These crops require cooler conditions during the grain-filling stage. Higher-than-normal March temperatures can speed up maturation, shrink grain size and reduce yields, potentially affecting farm incomes and food supplies. Authorities now face rising risks of water stress, surging electricity demand and heat-related illnesses as summer intensifies.