Iran Petrochemical Strikes: India Cuts Duties in 2026

What happened and why markets are watching

Israel said it carried out a large-scale airstrike on Iran’s petrochemical industry, claiming key production and export facilities were rendered inoperable. The attacks matter because petrochemicals are a major foreign-exchange earner for Iran and a critical feedstock source for Asian chemical value chains. The escalation also sits alongside a broader regional disruption, including restricted shipping through the Strait of Hormuz and reported strikes on other industrial infrastructure.

Israel’s claim: Assaluyeh targeted, operations halted

Israeli Defence Minister Israel Katz said in a video statement on the 6th that Israel struck Iran’s largest petrochemical complex in Assaluyeh and halted its operations. Katz said the facility is responsible for about 50% of Iran’s petrochemical production. He also linked the strike to an earlier attack “last week” on the second major petrochemical facility, saying the two sites together account for about 85% of Iran’s petrochemical exports and that both were taken out of operation.

Iran’s response: NPC confirms attacks on auxiliary facilities

Iran’s state-owned National Petrochemical Company (NPC) confirmed that “some auxiliary facilities” within the Pars Special Energy Economic Zone (PSEEZ) were attacked. NPC said the situation was “stably managed,” and added that safety, firefighting, and relief teams were dispatched immediately. The company said it was investigating the scale of the technical damage.

IDF framing: petrochemical output linked to military materials

The IDF said the strike hit Iran’s largest petrochemical complex in Asaluyeh, which it described as producing and exporting chemical materials to forces subordinate to the regime, including the Nuclear Ministry and the Revolutionary Guards. The military also claimed that striking the two main petrochemical complexes disabled over 85% of Iran’s petrochemical export capabilities. It was also reported that infrastructure at Asaluyeh supported production of materials used in explosives and propellant for ballistic missiles.

Mahshahr strike and reported casualties

Iranian media reported multiple explosions at the Assaluyeh site, according to the account carried by AFP. Separately, Israel carried out a similar strike on the Mahshahr Petrochemical Special Zone in southwest Khuzestan province on Saturday, a local Iranian official said. That official added that five people were killed.

Utility plants and the scale of disruption at Mahshahr

A New York Times report quoted two senior Iranian oil ministry officials as saying Israel attacked Iran’s largest petrochemical industrial complex in Mahshahr and effectively shut down production across the site. According to that report, airstrikes targeted two utility plants, Fajr 1 and Fajr 2, which provided gas, power, and industrial water to more than 50 plants inside the complex. Hamed Shams, described as head of marketing and communications for Iran’s petrochemical industries, wrote on social media that the attacks hit infrastructure that supplies electricity to the petrochemical plants and, in summer, “plays a key role in providing electricity to 500,000” residents of Khuzestan Province.

Production footprint and repair timeline cited by Iranian officials

Iranian officials described the Bandar Imam Petrochemical Complex as a main industrial hub producing 72 million tons of petrochemical products annually. The two oil ministry officials quoted by the New York Times said rebuilding the utility plants and restoring production could take about two years. Oil and energy expert Hamid Hosseini said downstream industries such as food production, automotive, and textiles could face a crisis once the war ends, and argued the affected industries were civilian livelihoods.

India policy response: duty waiver on 40 petrochemical products

Against the backdrop of supply instability, India scrapped customs duties on 40 petrochemical products to keep supplies stable and contain input costs amid the Middle East conflict, according to a press release. The Finance Ministry notification is effective 2 April and reduces import duty on 40 products to zero until 30 June. The coverage includes base chemicals, downstream polymers used across manufacturing chains, and engineering plastics. India also removed the Agriculture Infrastructure and Development Cess on ammonium nitrate imports over the same period.

India-linked flows: temporary US waiver and Iranian LPG cargo

India’s Petroleum and Natural Gas Ministry said on X that Indian refiners have secured oil and gas supplies from Iran “with no payment hurdles,” the first such imports since 2019 after US-imposed sanctions had curbed flows. The government did not disclose volumes or the names of importing companies. The flows were linked to a temporary US waiver allowing Iranian oil already in transit to be traded to ease global supply shortages triggered by the war. India also imported 44,000 tonnes of Iranian LPG on a sanctioned vessel, which was being discharged at Mangalore port.

Strait of Hormuz constraints and the LPG stress point

The war in Iran and Tehran’s decision to largely close the Strait of Hormuz have disrupted shipments of crude oil, LNG, and other commodities. Iran has effectively halted nearly all maritime traffic through the strait, permitting transit only for a limited number of vessels from select nations including Pakistan, Thailand, Malaysia, India, and China. LPG has been described as the refined product most affected by the Hormuz blockade, citing an International Energy Agency monthly report. India gets about 90% of its LPG imports from the Middle East, and the shortages have affected hundreds of millions of people.

Global petrochemical backdrop: supply shock replaces the expected surplus

S&P Global’s World Petrochemical Conference in Houston heard warnings that the disruption is worsening. Before the war, about 21 million barrels of oil and refined products, roughly 20% of global supply, exited the Persian Gulf through the Strait of Hormuz every day, according to S&P Global Energy’s head of research Jim Burkhard. For March, the market was missing about 14 million barrels per day, with some volumes trickling out via occasional ships and pipelines. S&P’s Hart said the industry has lost 15 million tons of Middle Eastern production capacity on an annualised basis, while another 140 million tons of capacity across Northeast Asia, Southeast Asia, and the Indian subcontinent is affected by dwindling feedstocks. Plants in those regions have throttled back production by 7-8 million tons, and ethylene outages due to the war amount to 12% of global production.

What this means for India-facing sectors

India’s duty waiver signals a policy focus on limiting cost spikes for chemical and manufacturing supply chains during a period of uncertainty in feedstocks and shipping. For refiners and gas marketers, the combination of constrained Gulf transit and emergency sourcing steps, including a 44,000-tonne Iranian LPG cargo, highlights how physical availability can become a near-term constraint even before prices settle. For exporters, the conflict is already being translated into higher logistics and input costs: Indian pharma exporters may lose up to USD 750 million if the Iran war continues through April, up from earlier estimates of USD 150-200 million.

Key facts at a glance

Conclusion

Israel’s strikes and Iran’s damage-control response have put the region’s petrochemical infrastructure and export flows under sharp focus, with knock-on effects extending to shipping lanes and Asian chemical supply chains. India’s immediate response has been policy-led, including a time-bound duty exemption on 40 petrochemical products and steps to stabilise fuel availability. The next key developments to watch are further official updates on plant operability in Assaluyeh and Mahshahr, and any changes in permitted transit through the Strait of Hormuz.