Collateral Damage: How the Conflict Involving Iran is Crushing South Asia's Working Class

India, Pakistan, Bangladesh, and Nepal are together home to nearly two billion people, accounting for about 23 percent of the world’s population. Even before the war on Iran, the region depended heavily on imported energy, much of it originating from Gulf countries. However, the extent and nature of exposure to Gulf supplies and the Strait of Hormuz varied significantly across these nations. Now, they are all feeling the severe economic fallout of a prolonged and expanding war as supply routes become increasingly choked.

India imports approximately 85 percent of the crude oil it consumes, making it the third-largest crude importer in the world. Before the conflict, Gulf producers such as Iraq, Saudi Arabia, the UAE, and Kuwait were among its major suppliers, while Qatar served as a leading source of liquefied natural gas (LNG). Although India possesses a more diversified supply network that includes crude from Russia, Africa, and the Americas, it still faces massive absolute exposure.

Pakistan is also highly dependent on imported energy, particularly crude oil, petroleum products, and LNG. Historically, Saudi Arabia, the UAE, and Kuwait have been crucial oil suppliers, with Qatar acting as its primary long-term LNG provider. Bangladesh produces some natural gas domestically, but increasingly relies on imported LNG as local production struggles to meet demand, with Qatar acting as a principal supplier alongside imported refined petroleum products.

Nepal, being a landlocked country, has no direct crude oil or LNG imports from the Gulf. Instead, it relies almost entirely on India for petroleum products such as petrol, diesel, kerosene, and LPG. Consequently, its exposure to Gulf disruptions is indirect, as higher costs or supply shortages in India quickly feed through to Nepal’s fuel supplies and prices.

As is frequently the case in such geopolitical crises, it is the poor and economically vulnerable who are bearing the brunt of the hardship.

Sajida Jibran, a 45-year-old housekeeper in Pakistan’s southern coastal city of Karachi, works long hours in an affluent neighborhood. With a husband who can no longer work due to health issues and three children in school, she has watched her rent skyrocket from 15,000 Pakistani rupees ($54) to 25,000 rupees ($90) in just a month. Furthermore, electricity and gas bills have multiplied exponentially, forcing her to make the heartbreaking decision to stop paying her children's school fees so she can afford basic food.

In India, Balendra Singh works as a security guard in New Delhi and lives in a small room in Noida with six family members. Following the outbreak of the US-Israeli war on Iran, inflation and soaring living costs forced him to send some family members back to his village in Lucknow to cut expenses. Facing stagnant salaries and rising transport and food costs, Singh and his neighbors have even resorted to using old wood-based fuels when LNG supplies were disrupted.

Across the border in Bangladesh, Asma Begum works as a domestic worker in Dhaka, earning around 5,000 taka a month ($41). As rich households face mounting financial pressure, they are cutting back on discretionary spending like paid domestic help, reducing income opportunities for lower-income workers like Asma and rippling the economic strain across multiple families.

Meanwhile, in Nepal, Gyanu Basent works as a porter in the Gaushala area of Kathmandu. Supporting his 15-year-old child, aging father, and siblings after losing their village farming livelihood and savings, Basent struggles with inconsistent daily earnings amid soaring essentials costs, relying on a nonprofit to help fund his daughter's education.