Iran Tensions Begin to Impact Global Trade, Raising Concerns for India’s Basmati Rice Exports

Key Highlights

• Rising Iran tensions may disrupt global trade and shipping routes.

• The Middle East remains the biggest market for Indian basmati rice exports.

• Exporters advised to avoid new CIF contracts due to rising risks.

• Freight, insurance, and marine fuel prices may increase sharply.

• Basmati wholesale prices have already risen by 10-15% in one month.

Rising geopolitical tensions in Iran and the Gulf region are beginning to affect global trade flows. The situation is now creating serious concerns for India’s basmati rice export sector, as several Middle Eastern countries rely heavily on Indian basmati rice. If the situation worsens and shipping routes are disrupted, exporters could face higher costs, delays, and possible losses on fixed-price contracts.

Growing Concerns Over Shipping Through the Strait of Hormuz

The Strait of Hormuz is one of the most important global shipping routes, especially for energy and commodity trade. Any disruption in this route due to escalating tensions in Iran could impact international shipping and trade.

Countries such as Iran, Saudi Arabia, Iraq, the United Arab Emirates, and Yemen are major buyers of Indian basmati rice. Since these nations are located in the Gulf region, any disturbance in shipping routes or rising crude oil prices could directly increase freight charges, insurance costs, and transportation expenses.

This situation may disturb the entire supply chain and create uncertainty for exporters sending shipments to these markets.

Indian Rice Exporters Association Issues Advisory

In response to the worsening geopolitical situation, the Indian Rice Exporters Association (IRA) has issued an advisory to its members, urging them to remain alert and cautious.

The association warned that tensions in Iran and surrounding regions could escalate further and potentially disrupt shipping through the Strait of Hormuz. Exporters have been advised to avoid entering into new Cost, Insurance, and Freight (CIF) contracts for affected destinations.

Instead, exporters are encouraged to prefer Free On Board (FOB) contracts. Under FOB agreements, the international buyer takes responsibility for freight, insurance, and shipping risks after the goods are loaded. This strategy can help exporters protect themselves from unexpected increases in transportation and insurance costs.

The association also advised exporters to avoid open contracts that do not have proper risk protection.

Rising Crude Oil Prices May Increase Shipping Costs

Industry bodies believe the current tensions in Iran and the United Arab Emirates could directly influence global shipping costs. If crude oil prices rise sharply, marine fuel prices will also increase.

Higher fuel prices may reduce the availability of container and bulk cargo vessels. As a result, freight charges and marine insurance premiums could rise suddenly.

In such situations, exporters who have already signed fixed-price contracts could face significant losses because they would have to bear the additional shipping costs. Therefore, exporters are being urged to exercise restraint when accepting new orders and to avoid long-term fixed-price agreements without adequate risk protection.

Middle East Remains the Largest Market for Basmati Rice

Trade data shows that India’s basmati rice exports are heavily concentrated in the Middle East and Africa.

During the period from April to December 2025, the Middle East remained the largest market for Indian basmati rice. India exported 3,205,925 metric tons of basmati rice to this region, with a total value of ₹23,771.39 crore (around $1.2 billion). The average export price stood at ₹74,148 per metric ton.

In comparison, exports to Africa during the same period were significantly smaller. India exported 321,324 metric tons of basmati rice to African countries, valued at ₹2,375.35 crore (approximately $1.2 billion).

These figures clearly show that the Middle East is a far more important market for basmati rice in terms of both volume and value.

Africa Dominates Non-Basmati Rice Exports

While the Middle East leads in basmati rice trade, the export pattern for non-basmati rice is quite different.

Between April and December 2025, Africa became the largest market for non-basmati rice, importing 6,834,005 metric tons from India. However, the average export price for non-basmati rice in Africa remained lower compared to the prices seen in Middle Eastern markets.

This means that although Africa accounts for a larger export volume, the Middle East remains more valuable for India’s rice export earnings due to higher prices for basmati rice.

Five Middle Eastern Countries Dominate Basmati Imports

India’s basmati rice exports are heavily dependent on five major Middle Eastern countries:

• Saudi Arabia

• Iran

• Iraq

• United Arab Emirates

• Yemen

Together, these five markets account for nearly 50 percent of India’s total basmati rice exports.

Among them, Saudi Arabia is the largest importer, purchasing 766,382 metric tons of basmati rice. Iran follows closely with 681,436 metric tons of imports.

These numbers clearly highlight the strong trade relationship and regional dependence between India and Middle Eastern markets for basmati rice.

Basmati Rice Prices Already Showing Volatility

The uncertainty created by geopolitical tensions is already affecting the basmati market. Wholesale prices of basmati rice have increased by 10 to 15 percent over the past month.

Market experts believe that continued uncertainty in key importing countries like Iran may lead to further price fluctuations in the coming months.

Industry bodies are closely monitoring the situation and are maintaining communication with exporters whose shipments are either in transit or waiting at destination ports. Additional advisories may be issued depending on how the geopolitical situation evolves.

Exporters Urged to Take Strategic Decisions

The current geopolitical developments clearly show how regional conflicts can influence global food trade. If tensions in the Gulf region continue to escalate, the impact may not remain limited to basmati rice alone but could affect the broader agricultural export sector.

For Indian rice exporters, the need of the hour is caution and strategic planning. Carefully structured contracts, risk management, and flexible pricing strategies will play a crucial role in protecting exporters from unexpected losses in the coming months.

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CMV360 Says

Rising geopolitical tensions in Iran and the Gulf region are creating uncertainty for India’s basmati rice trade. Since the Middle East is the largest and most valuable market for Indian basmati, any disruption in shipping routes or fuel prices could affect exports and costs. Exporters are therefore being advised to act carefully, avoid risky contracts, and focus on flexible trade strategies. Strategic planning and caution will be crucial to protect export margins during this volatile period.