Covid Lessons, Crude Reality: CFOs Enter Another Crisis Cycle

The escalating US–Iran conflict is beginning to weigh heavily on India. Domestic markets fell sharply yesterday, after reports of Israel striking key Iranian energy assets, including the South Pars gas field, and Iran retaliating with attacks on oil and gas facilities in the UAE and other parts of the Middle East. Geopolitical analysts warn that the conflict may not de-escalate anytime soon and could persist for as long as six months.

India imports nearly 90 per cent of its crude oil and a significant portion of it passes through the Strait of Hormuz. Not only it, but a large share of this crude oil is also sourced from the Gulf region. Any disruption, in the form of supply constraints, logistical bottlenecks or even speculative price spikes, translates directly into higher input costs across the economy.

For Chief Financial Officers (CFOs), this is not an abstract macroeconomic concern; it is a real-time test of financial resilience, planning discipline and strategic agility. In many ways, the current moment echoes the early days of the Covid-19 pandemic. Back then, CFOs were forced to get into action overnight — from driving growth to preserving cash, from expansion to survival. Balance sheets were reworked upon, cost structures were redesigned, and contingency planning became a core part of decision-making. While the nature of the crisis today is different, the underlying lesson remains the same: resilience is built not in stable times, but in moments of disruption.

The first and most immediate impact of the current crisis is, visibly, on energy prices. Even a mere imagination of risk in critical oil-producing regions tends to push crude prices upward; and this has a cascading effect. Higher fuel costs lead to higher transportation expenses, higher manufacturing input costs, putting pressure on margins ultimately. Almost all sectors are affected, though aviation, logistics, chemicals and heavy manufacturing are most vulnerable. CFOs across these industries are being compelled to revisit plans made a quarter ago, recalibrating cost structures and reassessing their profitability forecasts.

The other concern is, inflationary pressures are likely to build. India has, in recent years, managed to kept inflation under control despite global volatility. However, a sustained spike in crude prices could reverse this trend. For finance leaders, this raises a complex dilemma: how much of the cost increase can be passed on to customers without affecting demand?

Currency dynamics add another layer of complexity. When oil prices go up, India’s current account gap widens, placing downward pressure on the rupee. A weaker currency, in turn, makes imports more expensive, reinforcing a cycle that intensifies financial stress. CFOs, whose companies are highly dependent on imports, must navigate greater volatility in foreign exchange markets. What was once a routine treasury activity—hedging—is now an essential lever for managing risk and ensuring resilience.

The crisis has also led us to rethink about supply chains. If Covid pandemic exposed the fragility of global supply networks, the current conflict is reinforcing the need for diversification and resilience. Companies that once prioritized for cost are now being compelled to optimize for continuity. For CFOs, this means balancing efficiency with redundancy—often at a higher cost.

The crisis has, again, brought liquidity management to the forefront. CFOs are likely to prioritize cash conservation, secure credit lines and maintain financial flexibility – as was their priority during pandemic times. To CFOs, expansion plans may be deferred and there could be greater scrutiny of capital allocation decisions. Thus, there is a visible shift from a growth-first mindset to a resilience-first approach.

Financial markets, meanwhile, are acting as both a barometer and an amplifier of these concerns. Such volatilities in capital markets are directly impacting companies, particularly those planning fund-raising or relying on market-linked instruments. CFOs, in such a situation, must plan for both running the business efficiently as well as securing funding in a situation where money is harder to get and less predictable.

Having said, the experience of Covid offers one important lesson: preparedness; and CFOs who have passed though those uncertain times are better equipped today to deal with the situation. They are creating crisis playbooks, scenario planning frameworks and have a deeper appreciation of risk.

The question is no longer whether a disruption will occur, but how effectively organizations can respond when it crops up.

For CFOs, the challenge is clear: apply the lessons of Covid to ride over the crude reality of today’s crisis. If the pandemic was the first great stress test of modern finance leadership, the current oil shock may well be the next.