War Impact ::: Spike in crude prices, closure of aviation hubs, airspace restrictions across West Asia gives mega blow to Airline industry

Biggest oil disruption in history? Energy hubs are up in flames in US, Russia too

Private sector growth stalled in many parts of the world.  

Iran war starts to hit global economy :::: The conflict ​has already prompted many of the world's central banks to envisage tighter policy to keep a lid on price pressures.

The world’s 20 largest publicly listed airlines have lost about $53bn in value since the US-Israel war against Iran began.

IndiGo, which operates one of the most expansive international networks among Indian low-cost carriers, has suspended flights to Doha, Kuwait, Bahrain, Dammam, Fujairah, Ras Al Khaimah and Sharjah until March 28.

 

Air India has cancelled 2,500 flights to the Gulf since hostilities erupted and is currently operating only about 30% of its usual schedule in the region due to the ongoing Iran conflict, CEO Campbell Wilson revealed in an internal note to employees.

Energy infrastructure was targeted as the war in Iran, which began on February 28, escalated. Energy hubs across the Persian Gulf came under attack between March 18 and 20.

Crude oil prices have surged over $100 a barrel. With the energy infrastructure in the Middle East likely to take years to be rebuilt, the world could be set for the biggest oil disruption in history.

Ukranian drones struck two major oil refineries as well as a major oil export terminal in Russia as Kviy employs barrages of nearly 300 drones to attack targets deep inside Russia. 

(Image for Representation: India Today/Reuters) 

It is a predicament shared by energy-intensive companies across Britain and Europe and Asia. 

The Iran conflict has arrived as the latest – and for some potentially decisive – blow to industries such as steel and chemicals, already weakened by years of sky-high energy costs and cheap competition from abroad. 

At British Steel’s Scunthorpe plant, the operating costs of the plant taken into public control last year are already £1.3m a day.

Israel struck Iran's South Pars gas field, the world’s largest, triggering retaliatory strikes across the region. QatarEnergy reported "extensive damage" and "sizable fires" at Ras Laffan Industrial City, the world’s largest LNG complex, following Iranian missile strikes on March 19. "Iranian aerial attacks have caused extensive damage to the world’s largest gas plant in Qatar," Reuters reported, noting production halts that could cut Qatar’s LNG export capacity by up to 17%.

Saudi Arabia’s SAMREF refinery in Yanbu, a key Red Sea export hub, was hit by a drone the same day, with damage still being assessed, according to the Saudi defence ministry. Fires also broke out at Kuwait Petroleum Corporation’s Mina al-Ahmadi and Mina Abdullah refineries after drone strikes.

Iran also broadened its strikes to Gulf neighbours, while UAE gas facilities were shut after missile interceptions.

Spike in global crude prices, closure of busy aviation hubs, and sweeping airspace restrictions across West Asia have collectively delivered a body blow to the airline industry.  

The world’s 20 largest publicly listed airlines have lost about $53bn in value since the US-Israel war against Iran began on February 28, the Financial Times reported.  

Airspace restriction in West Asia acts as a double whammy for airlines, which count the region as a crucial corridor for flights to US and Europe since Pakistan banned Indian carriers from its airspace last year.

Flights from India to Europe and North America are being pushed onto longer southern arcs as airlines avoid conflict-hit airspace across West Asia. What used to be a straightforward westbound corridor has become a costly detour.

The compounding effect is severe for the sector as a whole. Quarterly operational costs for airlines could rise by as much as 30 percent on affected routes. 

For instance, Air India’s Delhi–London non-stop flight now takes over 12 hours, up from around eight earlier. Its Mumbai–New York service, previously a 13–14 hour non-stop, now operates via Rome, with total travel time ballooning to nearly 21 hours.

These additional bottlenecks for Air India are on top of the projected loss of $600 million annually due to the Pakistani airspace ban. 

IndiGo's situation is even more dire. India’s largest airline leases six long-haul Boeing Dreamliners from Norway's Norse Atlantic Airways.

But because those planes carry European registration, they fall under a stricter EU Aviation Safety Agency advisory barring flights over the airspace of Iran, Iraq, Israel, Kuwait, Lebanon, Qatar, the UAE and Saudi Arabia.

What was a thriving and high-frequency corridor connecting millions of Indian workers, tourists, and businesses to the Gulf has been reduced, at least for now, to a trickle.

In Europe, the continent’s steel industry has for the past year been warning that it is in danger of collapsing unless something is done to change the way electricity is priced.

Chris Williamson, chief business economist at S&P Global ​Market Intelligence, said the euro area numbers were "ringing stagflation alarm bells", referring to the risk of a painful combination of stagnation amid rising prices.

The 2026 Iran war is creating a severe global energy supply shock, potentially worse than the 2008 recession due to an estimated 15% reduction in global oil supplies and significant shipping disruptions through the Strait of Hormuz. This crisis is forcing massive shipping reroutes, doubling diesel/jet fuel prices, and triggering sharp increases in global inflation.

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