Iran War Forces India to Redirect Trade — Tanzania Emerges, Oman Falters

July 1, 2026 5 min read

India is rapidly abandoning its traditional trade routes through Oman and pivoting toward Tanzania as conflict with Iran disrupts shipping lanes and forces New Delhi to redraw its commercial map across the Indian Ocean. The shift, already visible in freight data and port activity, marks one of the most significant redirections of Asian trade flows since container shipping normalised global supply chains. For South African businesses with Indian suppliers or competitors, the realignment carries direct consequences for commodity prices, shipping costs, and regional logistics partnerships.

Oman's Port Traffic Drops as Tensions Mount

Trade activity through Oman's flagship port at Salalah has fallen sharply since hostilities with Iran intensified. The facility, which handles roughly 4.5 million TEUs annually and serves as a transshipment hub for Indian Ocean cargo, recorded a noticeable decline in vessel calls from January through March. Shipping executives familiar with regional operations confirmed that several major carriers have rerouted vessels away from Persian Gulf approaches, extending journey times but avoiding contested waters. Indian exporters who once channelled pharmaceuticals, textiles, and engineering goods through Salalah now face longer lead times and higher insurance premiums. That has pushed some to explore alternatives farther south along Africa's eastern coastline.

Tanzania's Port Gains Momentum

The Port of Dar es Salaam is absorbing a growing share of Indian trade that once flowed through Omani hubs. Tanzanian authorities have reported increases in cargo throughput, with particular growth in containerised goods arriving from Indian manufacturers. The Tanzania Ports Authority confirmed that transit volumes rose during the first quarter, though officials declined to provide specific figures pending finalisation of quarterly statistics. Infrastructure upgrades completed over the past two years have improved the port's handling capacity, making it a viable alternative for shippers seeking to bypass Persian Gulf chokepoints. Indian trading houses have begun establishing stronger relationships with Tanzanian logistics providers, and freight forwarders operating out of Dar es Salaam say inquiry volumes from Indian clients have jumped significantly since December.

Commodity Routes Face Separate Disruption

India's energy imports present a more complicated picture. Crude oil shipments from Russia, which India dramatically expanded following Western sanctions, remain largely unaffected by the Iran conflict since they route through the North Indian Ocean. However, liquefied natural gas cargoes that previously transited through Omani terminals have faced delays. The India Strategic Petroleum Reserve has drawn down reserves to compensate for supply chain disruptions, according to industry sources tracking government procurement patterns. Energy sector analysts believe the disruption has accelerated New Delhi's interest in diversifying import infrastructure, including a proposed pipeline corridor linking Tanzania's gas fields to regional markets.

Insurance and Shipping Costs Climb

War risk premiums for vessels operating near Iranian waters have surged since the conflict escalated. Lloyd's of London underwriters adjusted risk ratings for the Gulf of Oman and adjacent shipping corridors in February, pushing per-voyage insurance costs to levels not seen since earlier episodes of regional instability. Indian shippers report that freight rates on routes originating from Gulf ports have climbed between 15 and 22 percent depending on cargo type and destination. For South African importers sourcing goods from Indian manufacturers, these increases translate into higher landed costs for everything from automotive components to processed foods. Logistics companies with South African operations that rely on Indian ocean freight are already passing those costs downstream.

Indian Businesses Seek Stability

Indian multinationals with established operations in East Africa are reaping benefits from the trade redirection. Companies that expanded into Tanzania and Kenya over the past decade now find their regional distribution networks better positioned than those relying on Gulf-based logistics chains. The Indian Ocean trade realignment is reinforcing a broader strategic trend where New Delhi deepens commercial ties with littoral states along Africa's eastern seaboard. Trade agreements signed between India and the East African Community over recent years are providing a framework for the surge in bilateral commerce, though customs bottlenecks and port infrastructure limitations in Tanzania remain bottlenecks that both governments are working to address.

South African Businesses Feel the Ripple

South African companies importing Indian goods face a complex set of consequences. The rerouting of Indian cargo away from Salalah toward Dar es Salaam opens potential for new shipping services connecting South African ports to Tanzanian transshipment hubs, reducing dependence on routes that funnel through Dubai or Cape Town. On the other hand, longer shipping distances and elevated war risk premiums are raising input costs for manufacturers and retailers across KwaZulu-Natal and Gauteng. South Africa's chemical industry, which sources intermediate products from Indian suppliers, has flagged freight cost pressures in recent earnings statements. Retail sector analysts tracking pricing at major chains say consumer goods categories most exposed to Indian sourcing could see margin compression through the middle of the year unless shipping conditions stabilise.

What Happens Next

Indian trade officials have indicated that New Delhi expects the route adjustment to become permanent for a substantial portion of bilateral commerce with Europe and East Africa. A delegation from India's Ministry of Commerce visited Dar es Salaam in March to discuss infrastructure cooperation and customs facilitation measures with Tanzanian counterparts. Carriers including Maersk and MSC have confirmed that service loops connecting Indian ports with East African destinations will be expanded over the coming months. For South African businesses watching the shift, the practical implications will emerge over the next two quarters as new shipping schedules take effect and freight markets reprice. The trajectory of the Iran conflict itself remains the critical variable, but most analysts expect that even a resolution would not fully reverse India's reoriented trade map.