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Rising geopolitical tensions between the United States and Iran have elevated global macro uncertainty, with concerns around potential supply disruptions through the Strait of Hormuz supporting crude prices and increasing market volatility. For GCC economies, the implications are two-fold. Elevated oil prices support fiscal balances, liquidity, and project spending across hydrocarbon-driven economies such as Saudi Arabia, UAE, and Qatar. However, prolonged instability introduces risks around capital flows, execution delays in infrastructure and energy projects, supply-chain bottlenecks, higher freight and insurance costs, and potential deferral of private capex.

From an Indian corporate perspective, companies with material exposure to the Middle East particularly across EPC, Oil & Gas services, power transmission, defence exports, and infrastructure may experience near-term volatility depending on (a) project concentration in specific GCC countries, (b) nature of contracts, (c) receivable cycles (d) on-ground execution risk (e) the potential deferral or slowdown of fresh order inflows amid elevated geopolitical uncertainty.

Within our coverage universe, select companies have meaningful exposure to Middle East markets (refer Exhibit 1). In light of the escalating US–Iran conflict, we believe these companies may face near-term headwinds including execution disruptions due to on-ground constraints, supply-chain and logistics challenges leading to higher freight and insurance costs, deferment of new order, slower tender finalizations, and potential postponement of dispatches as customers recalibrate project timelines. We are assessing the potential impact on company-specific exposures and await further clarity from management to better gauge associated risks.

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