India’s Rice Exports Face Disruption as Middle East Tensions Rise

Novel geopolitical risks in the Middle East are threatening India’s rice exports, particularly to key markets in Africa and the Middle East. Escalating tensions following recent strikes and counter-strikes have prompted caution among exporters, with advisories issued to mitigate potential losses.

Strait of Hormuz: A Critical Trade Route at Risk

The deteriorating situation centers around the Strait of Hormuz, a vital maritime passageway for approximately 20-25% of the world’s crude oil trade and other crucial commodities . While the Strait hasn’t been officially closed, the risk of attacks on tankers and ships passing through the area poses a significant threat to trade.

IREF Advises Caution on New Contracts

The Indian Rice Exporters Federation (IREF) has issued an advisory to its members, urging them to avoid new ‘cost, insurance, and freight’ (CIF) commitments to Iran and Gulf destinations . Instead, IREF recommends structuring transactions on a ‘free on board’ (FOB) basis, shifting the responsibility for freight, insurance, and related risks to international buyers. This move aims to protect Indian exporters from potential financial losses due to sharply rising freight rates and insurance premiums.

Impact on Key Export Markets

Shipments to Africa and the Middle East collectively account for nearly half of India’s total rice exports. Between April and December 2025, exports to Middle Eastern countries reached 3.90 million metric tonnes, while shipments to Africa totaled 7.16 million metric tonnes . The main basmati markets – Saudi Arabia, Iran, Iraq, the UAE, and Yemen – are particularly vulnerable to these disruptions.

Potential for Price Volatility

IREF anticipates heightened price volatility in the near term, especially given that Iran remains a major market for Indian basmati rice. Developments in Iran and the United Arab Emirates could also impact bunker fuel costs and the availability of container and bulk vessels . Exporters have been advised to exercise restraint when finalizing new deals and avoid taking on unhedged positions.

Monitoring the Situation

IREF is closely monitoring the situation and maintaining contact with exporters whose cargoes are currently en route or awaiting clearance at destination ports. Wholesale basmati prices have already risen by 10–15% over the past month, indicating the growing sensitivity of the market to geopolitical events.

Disclaimer: This article is based on information available as of March 1, 2026, and is subject to change as the situation evolves.