The conflict in the Middle East is rapidly expanding across the region as the U.S. and Israel-led war with Iran enters its sixth day.

Images published Thursday showed destruction across Tehran after nearly a week of strikes on Iran’s capital.

Iran has retaliated by launching a wave of missiles and drones at Israel, as well as targeting U.S. allies in the region.

Explosions have been reported in Qatar and Bahrain, while oil-rich Azerbaijan said it was attacked by two Iranian drones and Tehran claimed naval fighters had struck a U.S. tanker in the north of the Persian Gulf.

U.S. President Donald Trump has said the Iran war could last for four to five weeks but warned the campaign could also “go far longer than that.”

“Cuba’s next,” said Sen. Lindsey Graham, a Republican and ally of U.S. President Donald Trump, after the U.S. and Israel began strikes on Iran.

The U.S. has imposed an oil blockade on the communist-run island nation since January, shortly after its ally and a key provider of oil, Venezuelan President Nicolás Maduro, was seized in an extraordinary U.S military operation. It has caused a worsening economic crisis and left Cuba facing its biggest test since the collapse of the Soviet Union.

Now Iran, with which Cuba has a strategic partnership, is under sustained attack. “This communist dictatorship in Cuba, their days are numbered,” Graham told Fox News’s “Sunday Night in America.”

Before the Iran strikes, Trump said he wanted a “friendly takeover” of the island, without giving details. The comments, alongside the U.S. attacks on Iran and Venezuela, have done little to allay growing fears in Havana, experts told CNBC.

A “friendly takeover” could resemble Venezuela in the aftermath of Maduro’s removal, “where you still have an authoritarian regime in power but moving in the direction and at the speed that the US determines,” said Carlos Solar, senior research fellow, Latin American Security at RUSI, a London-based defense think tank.

Solar told CNBC by email that Cuba had lost support from Venezuela and Iran “at a moment of maximum pressure” from the Trump administration.

But he added: “What is unclear is how the US will make the Cuban regime break, forcing Havana to capitulate.”

“We are not seeing the kind of military buildup prelude to operation Absolute Resolve that eventually led to Maduro being captured in January. It could well be that the US approaches Cuba in a totally different way,” Solar said.

A spokesperson for the White House and Cuba’s embassy in London did not respond to a CNBC request for comment.

Cuba’s Foreign Affairs Ministry has called for an end to the Middle East conflict and said it “condemns in the strongest terms” the joint U.S. and Israel attack on Iran on Feb. 28.

Russia recently warned that the situation in Cuba appeared to be escalating after Cuban forces killed four people who were off its coast in a U.S.-registered speedboat.

The blockade has effectively cut Cuba off from Venezuelan oil since launching a military operation to capture Maduro on Jan. 3. Cuba said 32 of its citizens were killed in the attack.

Trump has also said Cuba’s government poses “an unusual and extraordinary threat” and pledged to impose tariffs on any country that supplies it with oil. The U.S. Treasury said late last month, however, that it would allow the resale of Venezuelan oil to Cuba’s private sector.

The move appeared to reflect a small step to alleviate the island’s acute fuel shortage, which has forced a wave of airlines cut flights to the country. Tourism has long been a significant source of revenue for Cuba’s cash-strapped government.

Par Kumaraswami, professor of Latin American Studies at the U.K.’s University of Nottingham, told CNBC the Trump administration’s strikes against Iran and recent comments about Cuba’s regime had increased the mood of uncertainty and anxiety in Havana.

“Cubans are increasingly concerned about how they will survive in the midst of such global chaos, and the recent violence against Iran will have done nothing to allay their fears,” Kumaraswami said by email.

“At the same time, there are indications that the US administration is negotiating with the Cuban government regarding changes to Cuba’s economy, and this is indeed mirrored by Cuban President Miguel Díaz-Canel’s current focus on economic improvement as the priority,” she added.

Kumaraswami said the “message from Cuba” had been “constant” since the communists came to power in 1959: “Survival will only be achieved through adaptation to the changing geopolitical context.”

Cuba has adopted measures to protect essential services and ration fuel supplies for key sectors. The United Nations has previously warned of a possible humanitarian “collapse” as the country’s oil supplies dwindle.

“Cuba just bought itself a window — but it’s a narrow one,” Robert Munks, head of Americas research at risk intelligence company Verisk Maplecroft, told CNBC by email.

“The operation against Iran removes Cuba – temporarily – from Washington’s sights, as the US administration will be preoccupied with the Gulf campaign in the coming weeks.”

But Munks said he expected Cuba to return to the headlines, adding that the Cuban diaspora in South Florida would apply pressure and Washington has shown it is prioritizing the Western Hemisphere in its remodeled national security strategy.

“The regime in Havana remains in control, for the moment. Any unrest caused by economic hardship could be sudden and spontaneous, which would give Washington a pretext to refocus on pressuring the regime,” Munks said.

This report is from this week’s “Inside India” newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse. Subscribe here.

India can’t seem to escape from the fallout of the escalating conflict in the Middle East. A significant share of the country’s energy imports risk disruptions and its aviation sector is staring at higher costs due to airspace restrictions.

But there’s another multibillion-dollar worry that the country will need to contend with: remittances.

India is the largest recipient of remittances globally and they account for nearly 3.5% of the GDP — that’s higher than the share of exports to the U.S. at 2% of the economy. More than 9 million Indians reside in the Middle East and the money they send home plays a major role in shoring up India’s finances, helping cut its current account deficit.

The Indian diaspora in the Gulf countries contributes nearly 38% to India’s total remittance inflows, according to a Citi report. Based on the inflows of $135.4 billion in financial year 2025, the share of gulf countries is to the tune of $51.4 billion.

To put it in perspective: India’s total trade surplus with the U.S. was $58.2 billion in 2025.

According to experts, Indian workers in the Gulf countries are mostly employed in oil services, construction, hospitality and retail sectors, industries particularly vulnerable to the disruption caused by Iranian attacks.

“A sharp decline [in remittance inflows] – particularly if combined with higher oil prices due to the conflict – would worsen India’s external position and could put some pressure on the rupee,” said Alexandra Hermann, lead economist at Oxford Economics.

In recent years, India’s remittances have exceeded its foreign direct investment flows, with those from the UAE alone contributing nearly one-fifth of the flows, second only to the U.S (27.7%).

The good news, experts tell me, is that only a prolonged conflict in the Middle East will dent India’s remittance flows enough to impact the economy. The bad news is that no one is certain if this conflict will be a short one.

Hermann told me that a “moderate and temporary disruption” is manageable but “a bigger risk” would be if the conflict leads to a slowdown in construction and services activity in the Gulf, affecting Indian migrant workers.

The U.S.-Iran war is in its sixth day and is spreading into the wider region with the U.S. embassies in Riyadh and Kuwait also coming under attack. The U.S. Secretary of State Marco Rubio has vowed that the United States and Israel’s offensive against Iran will increase in its scope and intensity.

Deepa Kumar, head of Asia-Pacific country risk and co-lead of India research chapter at S&P told me that if the conflict lasts beyond six months, it will have a material impact on the Indian economy.

In case of a contained conflict “there could be some initial shocks to remittances” from the Middle East but that will be limited to spot worker contracts, Kumar said. Over the next few days her team will start assessing how a prolonged conflict could affect the economy.

Chances of the hostilities lasting longer have risen as both sides intensify their attacks. U.S. President Donald Trump on Monday said the military operation in Iran could go on “far longer” than the estimated four to five weeks.

Citi in its note on Monday said that if the conflict lasts long, remittances would be “negatively impacted” as income opportunities of the Indian diaspora will get affected. In the short run, however, “there could be a perverse positive impact if ‘risk aversion’ leads to more repatriation,” the note said.

Will the country suffer collateral damage on multiple fronts from a war it has little to do with, or will the conflict end before the country sees serious repercussions? We’ll know that for sure only in the months to come — watch this space.

Need to know

New Delhi oil supply worries. India imports nearly 85% of its crude and as global oil prices increase due to the Middle East conflict, the country’s already substantial energy import bill is expected to balloon. Indian airlines are also seeing cost escalations due to restriction on use of airspace over Gulf countries.

India and Canada vow to deepen ties. During Prime Minister Mark Carney’s visit to New Delhi earlier this week the two countries put differences aside, pledged to foster closer ties and vowed to deepen trade.

India’s economy grew at a faster pace. The economy grew at a faster-than-expected rate of 7.8% during the quarter ended December. The latest print comes after the government overhauled the framework for calculating economic output to improve accuracy.

Coming up

March 4-7: President of Finland Alexander Stubb visits India.

March 9: Rajputana Stainless IPO opens

Disney’s cruise line is going big in Asia.

This month, the company’s eighth and largest ship, the Disney Adventure, will embark on its maiden voyage, carrying passengers on three- and four-night journeys at sea from its berth in Singapore.

The vessel accommodates a whopping 6,700 passengers, around two-thirds more capacity than Disney’s Wish class ships, which are the Disney Wish, the Disney Treasure and the Disney Destiny. The Adventure can also carry around 2,500 crew members, about 1,000 more than on the Wish class ships.

“It takes a village to be able to support the type of service that we’re known for,” Joe Schott, president of Disney Signature Experiences, told CNBC.

The Disney Adventure sets sail at a time of rapid expansion for Disney’s cruise line. It is one of six vessels set to join the fleet by 2031. It’s also emblematic of the company’s global aspirations, which coincides with a sharp decline in international visitors venturing to the United States.

While tourism grew worldwide last year, the United States was the only major destination to see a drop in foreign visitors, according to the World Travel & Tourism Council. Overall, international travel to the U.S. fell 6%, the organization found. That decline continued into 2026, as January’s numbers were down 4.8% compared with the same month a year prior.

Travel bans, visa fees and invasive searches at ports of entry are all contributing to international travelers leaving the United States off their travel itineraries, according to the WTTC. Trade frictions, geopolitical unease and safety concerns have also contributed to the drop in demand for travel stateside, travel experts told CNBC.

Still, Disney’s domestic theme parks drive around two-thirds of revenue in its experiences division, which includes parks, cruises, resorts and consumer products. International destinations account for around one-fifth of revenue.

Expanding its fleet to new ports allows Disney to entice guests that may not have otherwise been able to venture to its theme parks or get on board one of its cruise ships. And Asia is a rapidly growing market.

Disney is no stranger to the Asian market. It already has a strong footprint of theme parks and resorts in Tokyo, Hong Kong and Shanghai.

“We have a really strong presence already up in the the northern part of Asia,” Schott said. “But, I think as you think about the southeast part of Asia, we don’t really have a physical presence. So, this is a great way to really be able to connect a whole lot of people that haven’t had the opportunity to do a physical Disney experience before.”

The cruise industry, in particular, in Asia has been in a state of rapid growth in the wake of the pandemic. In 2024, the region accounted for 2.6 million cruise passengers, a 13% increase from the previous year, according to data from the Cruise Lines International Association.

“Prior to 2024 we were really seeing a rise in the disposable income and the income levels of Southeast Asian travelers,” said Dulani Porter, executive vice president and partner at Spark, a creative agency that works with hospitality and tourism brands. “And so it was a very, very important market for any international tourism organization.”

That’s where the Disney Adventure comes in.

Initially destined to be a floating casino, the ship went up for sale part way through its construction when its parent company, Genting Hong Kong, went bankrupt in 2022. Disney swooped in and bought it.

“I think this was a great opportunity, because if we hadn’t acquired the ship the way we did, we wouldn’t be going into this market as soon as we are,” said Bruce Vaughn, president and chief creative officer of Walt Disney Imagineering. “And that’s a great thing.”

Previously, all of Disney’s cruise ships have left from domestic ports in Florida before traveling to international destinations. In the case of the Adventure, the ship is the destination. Stationed in Singapore, the vessel will voyage entirely at sea, with no port calls.

And Disney says demand is already there. Disney’s cruises are already 80% booked for fiscal 2026, Schott said.

The Disney Adventure’s size isn’t the only thing that sets it apart from the rest of the fleet. The ship has been tailored for consumers in Asia.

“Since the ship is going to be dedicated to Singapore and that market, we also wanted to make sure that we address what we thought would be unique to them,” said Vaughn.

This came in the form of selecting franchises and characters that are popular in the region, designing entertainment and relaxation areas catered to local tastes and providing a diverse selection of menus across its restaurants.

“We’re looking forward to servicing a brand-new audience,” Schott said. “In that respect, the ship is a brand ambassador.”

Guests on board the Adventure will be immersed in Disney’s more than 100 years of storytelling with character meet-and-greets as well as themed shopping and entertainment areas.

Situated in the middle of the ship is a deck designed to look like a street from San Fransokyo, the fictional city in “Big Hero 6.” The area is home to arcade games inspired by the movie, a replica of the Lucky Cat Cafe owned and operated by Aunt Cass as well as four movie theaters and dedicated tween and teen spaces.

The street also features the first-ever Duffy and Friends store at sea and a National Geographic shop. Disney executives told CNBC that these brands are incredibly popular with consumers in the region.

Duffy the Disney Bear is a character that was developed initially for a merchandise line at Walt Disney World’s Disney Springs, but gained attention when it was brought to Tokyo a few years later. In the last two decades, Duffy has been joined by seven other stuffed animal friends and has become one of the bestselling merchandise lines for the company.

In 2023, Disney reported the character generated $500 million in sales annually.

In designing the Disney Adventure, the company was also conscious of local traditions. For many in Asia, vacations aren’t just for a nuclear family, but for extended family and even large groups of friends.

“I think one of the biggest distinctions that I’m seeing with South Asian cultures [is] travel really is about spending more time together,” Porter said. “Not to generalize, but North American cruisers will choose cruising because the kids can go do their thing and the parents can go do their thing, all contained into a ship.

“For Asian travelers, that is a very meaningful time spent together, where the grandparents and the kids and the parents and the grandparents, everybody is really trying to maximize all of that time together,” she said.

Both Vaughn and Schott detailed layers of experiences available to cruise guests that cater to different age ranges, both kids and kids at heart.

There’s Marvel Landing on the upper deck of the ship that features a rollercoaster, a spinning attraction and car-chase ride all inspired by The Avengers. In the same area is a sundeck, infinity pool and a bar.

Wayfinder Bay is an open-air area with amphitheater-like seating that doubles as a performance venue. And there’s D Lounge, which features a number of private karaoke rooms.

“We’ve had to think about that quite extensively in our parks in the region … multigenerational travel is just part of the formula,” said Schott.

Also part of the formula is Disney’s dining experience.

Aboard the Disney Adventure, guests will have an eclectic selection of food and beverages to try, with an emphasis on flavors that are popular in the region.

The Disney Adventure will have burgers and classic American fare at Stitch’s Ohana Grill, bubble teas at the Ursula-inspired Bewitching Boba and Brews, as well as pitas and kebabs at the Ms. Marvel-inspired Cosmic Kebabs.

There will also be Indian cuisine at Mowgli’s Eatery and Polynesian-inspired fare at Gramma Tala’s Kitchen.

Rotational dining is also featured on the cruise ship, a staple of Disney’s service.

While passengers have the option to grab quick-service meals and snacks throughout the ship, several of its restaurants are included in a prescheduled dining plan. Guests have reservations for each of these themed restaurants and rotate through them during their cruise.

Disney rotates the restaurant staff, too, to follow each group of passengers to their scheduled restaurant. As a result, guests have the same servers, busboys and restaurant managers throughout their trip, and the waitstaff gets to know the guests — and their preferences.

“I think at the end of the day, this entry into the market needs to be a really strong one for us,” Schott said. “So we’re looking forward to really being able to deliver the Disney-level of service at an extraordinary level.”

A widening Middle East conflict has posed a fresh test for global central banks, as fears of an oil shock and renewed inflation risks complicate policymakers’ calculus for shoring up growth.

Crude prices soared on Monday after the U.S. and Israel launched strikes on Iran over the weekend, killing Iranian Supreme Leader Ali Hosseini Khamenei. Tehran responded with missile attacks targeting multiple Gulf countries.

Tanker traffic through the Strait of Hormuz, the world’s most critical chokepoint for oil shipments, has effectively stalled as the threat of attacks from Iran deterred vessels from passing through the waterway.

Brent crude prices extended four days of gains, rising 1.6% to $82.76 a barrel on Wednesday, hovering near the highest level since January 2025. The U.S. West Texas Intermediate crude prices also rose for a third day to $75.48.

Higher energy prices would ultimately filter through to consumer and producer prices, particularly for economies that rely heavily on Middle East oil imports, leaving central banks scrambling to reassess their interest rate trajectory.

“The ongoing Iran conflict solidifies the case for many central banks to hold rates steady for now,” a team of economists at Nomura said in a note on Sunday.

As heightened tensions weigh on economic activity, policymakers are juggling a delicate task of balancing inflationary risk against slowing growth.

The European Central Bank is caught in what ING economists called a “genuine dilemma,” as an oil shock could push already sticky inflation higher while its growth outlook weakens under the strain of higher U.S. tariffs. They added that “to see a rate hike, the eurozone economy would have to show clear resilience.”

Europe imports nearly all of its oil and a significant share of its liquefied natural gas, raising the risk of a dual energy and trade shock, the bank said.

ECB council member Pierre Wunsch said this week officials would avoid reacting hastily to any movements in energy prices.

“If it lasts longer, if the increase in energy prices is higher, then we will have to run our models and see what happens,” Wunsch said.

Former Treasury Secretary Janet Yellen said the conflict could hit U.S. economic growth and fuel inflationary pressures, holding the Federal Reserve back from cutting rates.

“The recent Iran situation puts the Fed even more on hold, more reluctant to cut rates than they were before this happened,” Yellen said Monday.

U.S. inflation stood at 2.4% in January, above the Fed’s 2% target. Yellen warned that President Donald Trump’s tariffs could push annual inflation to at least 3%.

The latest flare-up comes after Trump’s seizure of oil-rich Venezuela earlier this year and his threat to take control of Greenland, another strategically significant energy reserve.

Brent crude has risen by 36% so far this year, according to LSEG data, while WTI futures were 32% higher as of Wednesday.

The global energy market is grappling with a worst-case scenario, with a prolonged disruption in the Strait potentially pushing Brent oil prices above $100 per barrel and European natural gas prices breaking 60 euros ($70.17) per megawatt hour, according to Bank of America.

Asian economies would be particularly exposed. Most crude shipped through the Strait of Hormuz flows to China, India, Japan and South Korea, according to the U.S. Energy Information Administration.

Under the assumption of a six-week closure of the Strait of Hormuz and a jump in oil prices from $70 to $85 a barrel, regional inflation in Asia could rise by about 0.7 percentage points, according to Goldman Sachs. The Philippines and Thailand are expected to be the most vulnerable, while China could see a “more modest increase.”

Sustained oil price hikes may lead Asian central banks such as the Philippines and Indonesia to pause on rate cuts, while policymakers in India and South Korea will likely hold rates steady for longer, said Michael Wan, senior currency analyst at MUFG Bank.

BMI, a unit of Fitch Solutions, estimates that the conflict will add seven to 27 basis points to headline consumer inflation across Asia, with the sharpest impact in Thailand, South Korea and Singapore due to higher energy weightage in their inflation calculations.

“For a 10% oil shock, the inflation addition is small enough that most are likely to look through it. [But] the calculus changes materially at $20–30/per barrel increases, where headline CPI impacts double or triple and second-round effects become harder to ignore,” the research firm said.

Rate hikes remain largely off the table for now, unless rising oil prices sustain and spill over into food and other commodities from higher transportation and freight costs, seeping into higher core inflation, it said.

Nomura expects Malaysia — which it identified as a “relative beneficiary” as a net energy exporter — as well as Australia and Singapore, to tighten interest rates. The bank also lowered its expectations for a rate hike by the Philippine central bank.

“The rise in oil price increases our conviction in Bank Negara Malaysia hiking rates [and] a risk that the Bangko Sentral ng Pilipinas could stay on hold — versus prior baseline of another 25-basis-point cut in April,” said Nomura.

The bank expects a modest 0.01-percentage-point impact from higher oil prices on Singapore’s GDP growth.

Indonesia and Singapore both said Monday they are closely monitoring financial markets. Bank Indonesia said it would act to keep the rupiah in line with economic fundamentals, while the Monetary Authority of Singapore said it was assessing the conflict’s impact on the domestic economy and financial system.

Fiscal stimulus and subsidies could cushion some of the inflationary impact and relatively benign price pressures heading into 2026, providing a relatively comfortable starting point.

“We expect Asia to use fiscal policy as the first line of defense to protect consumers,” Nomura economists said. Possible measures include price controls, higher subsidies, fuel excise tax cuts, and lower import tariffs on crude oil and refined products.

But subsidies could add fresh strain to governments’ already-tight fiscal budget deficits, said Rob Subbaraman, head of global macro research at Nomura on CNBC’s “Squawk Box Asia” Tuesday.

“So which ‘negative’ do you want to have: higher inflation or worse fiscal? These are policy choices the governments have to make.”

This report is from this week’s CNBC’s The China Connection newsletter, which brings you insights and analysis on what’s driving the world’s second-largest economy. You can subscribe here.

Nvidia’s latest warning is that Chinese rivals are going to disrupt the world. It’s not just in chips.

More often than not, the chatter among startups building AI tools in China is less about the domestic market and more about the global opportunity.

In fact, Tripo AI, an image-to-3D model generation company, said that around 90% of its users are outside China.

The startup is already in talks with major European and American companies in gaming, animation, and manufacturing about strategic investments, founder and CEO Simon Song told me last week.

Since Tripo released its 3D model generation platform in June 2025, monthly revenue quickly climbed to more than $1 million, Song said. He said that compared to corporate users in China, who are more focused on immediate returns, businesses in Europe and the U.S. are more willing to try out new AI tools even if there isn’t yet a clear revenue gain.

The startup is just an example of how quickly products are coming to market, despite global competition.

Tripo released its latest H3.1 model for 3D model generation last week, as the startup works to build a platform that lets individuals use AI to eventually design their own physical products for sale. Song said Tripo plans to release a new tool that cuts generation time at the Game Developers Conference in San Francisco, which runs from March 9 to 13.

The following week, several Chinese AI companies are set to speak virtually at Nvidia’s GTC conference in San Jose, California. Two notable in-person sessions listed feature the founder of Moonshot and engineers from ByteDance Seed.

Those are just some examples of how Chinese startups and tech giants are rapidly expanding worldwide, one year after DeepSeek’s AI reasoning model shocked global investors. And businesses aren’t waiting around for DeepSeek’s next model to drop.

Another Chinese startup, iSales, said it’s generated more than $1 million in revenue since June by helping more than 300 small Chinese manufacturers find buyers outside China.

They see an underserved market, despite trade tensions.

The quality of, say, a Chinese-made water pipe connector, is already 90% that of a comparable Japanese or German-made product — but available at one-third the price, Pan Yiming, founder and CEO of iSales, said at an event in Beijing. He charges 40,000 yuan ($5,800) per client and expects well over 1,000 businesses in China to sign up this year.

Later this spring, the company plans to launch its AI social media marketing tools to businesses outside China. Pan, a Tsinghua University graduate, also hinted at lofty ambitions: taking on American software giant Salesforce.

For now, iSales is a 50-person team mostly based in Shanghai’s Pudong district, where Pan said the startup gets free office space courtesy of the local government, along with subsidies to use Chinese AI models.

The capital strategy underscores how these companies are building with global markets in mind from day one. Both iSales and the far larger Tripo AI said they’re prioritizing fundraising from U.S. dollar-based investors, with an eye towards listing in Hong Kong down the road. In fact, iSales announced Tuesday it received a million-dollar angel investment from Singapore-based Impa Ventures.

Tripo’s Song already has experience with starting a business that can go public. He co-founded the AI model company MiniMax, which listed on the Hong Kong Stock Exchange in January. The stock climbed more than 9% Tuesday after its first, upbeat earnings release.

When it comes to bigger questions about what AI means for the world, Song also has his own vision.

In a previous role as head of animation at the Chinese AI company SenseTime, he noticed a pattern among his team of more than 30 people: even the most artistic graduates would hit creative blocks after completing repetitive animation tasks for five years to support one director’s ideas.

“Is that human? Is that great?” he said. With AI — and Tripo’s vision for a platform to change e-commerce — “we allow everyone to show off.”

Iran impact. The death of Supreme Leader Ayatollah Ali Khamenei in joint U.S.-Israel strikes has increased uncertainty over whether Trump will visit China as planned in late March.

Upbeat consumer. Lunar New Year holiday data point to a spending uptick, just enough to keep Beijing from likely embarking on large-scale stimulus.

China tech in Spain. Smartphone company Honor showed off its Robot Phone at the Mobile World Congress in Barcelona, while Xiaomi released its latest flagship smartphone lineup at prices similar to last year’s, despite a surge in memory chip costs.

March 5: China’s National People’s Congress begins; release of GDP and other economic targets

March 9: China CPI, PPI for February

March 10: China trade data for the first two months of the year

India and Canada need new friends — and customers. So this week, they put past, painful differences aside to pledge closer ties during Prime Minister Mark Carney’s visit to New Delhi, as U.S. and Israeli strikes on Iran escalated.

But the commitment is far from a full reset. It comes after the assassination of a Sikh activist, Hardeep Singh Nijjar, in Canada in 2023, which caused tensions between India and Canada, with each side expelling diplomats the following year. The Canadian government had accused Indian Minister of Home Affairs Amit Shah, a close ally of Prime Minister Narendra Modi, of plotting to target Sikh separatists in Canada. India has emphatically denied any connection to the killing.

Reema Bhattacharya, head of Asia risk insight, corporate risk and sustainability at Singapore-based risk advisory firm Verisk Maplecroft, told CNBC that a “true reset” in the relationship would depend on whether the visit leads to “sustained, working-level cooperation.”

She added that Nijjar’s killing “remains the single biggest political constraint on the relationship” and is unlikely to fade because “one meeting went well.”

“I’d describe this as a meaningful thaw, moving in the right direction, but not a clean slate,” she added.

Carney and Modi have extra motivation to forge ties, as Donald Trump reorders global trade and the U.S. is waging war on Iran.

“The United States is extremely volatile, not particularly predictable, and frankly, if I may be blunt about it, destabilizing many of the institutions and structures around the world,” Evan Feigenbaum, from the Carnegie Endowment for International Peace, told CNBC on Tuesday.

He said Carney’s trip to India and German Chancellor Friedrich Merz’s recent visit to China “is in no small degree in reaction to volatility from the United States.”

“On the strategic front, India is looking to build closer ties with Western nations beyond the U.S.,” said Arpit Chaturvedi, South Asia advisor at Teneo.

“The bitterness of the Nijjar case lingers but can be overlooked if those officials directly under Carney’s control (i.e. his cabinet) do not bring up the matter,” he added.

On Monday, Carney and Modi vowed to expand bilateral trade to 70 billion Canadian dollars ($51 billion) by 2030. Carney also committed to finalizing a comprehensive economic pact with India by the end of this year.

The two leaders also welcomed the 2.6 billion-Canadian-dollar commercial pact between Cameco Corp and India’s Department of Atomic Energy for the long-term supply of uranium.

But India’s ministry of external affairs confirmed, during the press conference to discuss details of the India-Canada meeting, that the previous uranium supply pact signed in 2015 between Cameco and India was not fulfilled.

The Canadian prime minister said his country has ambitions to become a key supplier of liquified natural gas (LNG) to India.

Canada, which aims to raise LNG production to 50 million tonnes per year by 2030 and 100 million tonnes by 2040, is looking for new markets.

India, meanwhile, plans to double the share of LNG in its energy mix. A Citi report on Monday warned that disruption in the Strait of Hormuz, a crucial waterway for oil and gas, is affecting 60% of India’s LNG imports, amid the escalating conflict in the Middle East.

“It is likely that India would want to open new avenues through alternative routes such as the Pacific and Canada could be a useful partner there,” said Chaturvedi.

But experts say that any long-term LNG contract with Canada will have to be “competitive,” as India is a price-sensitive market.

“Canada’s LNG capacity is still ramping up, and shipping to India is a long route,” said Bhattacharya of Verisk Maplecroft. She added that even if supply is available, aligning timelines, pricing expectations and demand needs “won’t be simple.”

The two countries could see expansion of trade in sectors such as clean energy, critical minerals, fertilizers and IT services, experts said.

On Monday, Carney and Modi said that ties between India and Canada had improved in the last year.

“Prime Minister Carney has not even completed one year in office, yet our relations have leapt forward by a light year,” Modi said in his speech on Monday.

Carney said that there was “more engagement” between the two countries in the last year “than there has been in the last two decades combined.”

But Modi, who has a reputation for personally receiving foreign leaders at the airport, was absent when Carney landed in New Delhi on Sunday.

The depth and pace of any pact between India and Canada will depend “not only on commercial logic but also on political trust,” said Chaturvedi.

Oil supertanker costs in the Middle East climbed to their highest level on record as conflict between the U.S. and Iran disrupts shipping through the strategically vital Strait of Hormuz.

Major marine war risk providers have started to scrap cover for vessels operating in the Persian Gulf as the fallout from a sudden security shock hobbles key shipping routes in the region.

The benchmark freight rate for Very Large Crude Carriers (VLCCs) — used to ship 2 million barrels of oil from the Middle East to China — hit an all-time high of $423,736 per day on Monday, data from LSEG showed. That marked an increase of more than 94% from Friday’s close.

Alongside a significant jump in oil and gas prices, the stratospheric rise in the cost of hauling crude oil follows the U.S. and Israeli attacks on Iran over the weekend. The expanding conflict has resulted in the effective halt of shipping traffic through the Strait of Hormuz — one of the world’s most important oil choke points, located in the gulf between Oman and Iran.

An Iranian Revolutionary Guards senior official said Monday that the Strait of Hormuz had been closed and warned any vessel attempting to pass through the waterway would be attacked, state media reported. The claim has since been disputed by the U.S. military’s Central Command, CENTCOM, Fox News reported.

“Charterers in the VLCC segment stepped back from the market and avoided securing vessels as multiple incidents have led to increased threat levels around the strait of Hormuz, despite the waterway not being officially closed,” Sheel Bhattacharjee, head of freight pricing in Europe at Argus Media, told CNBC by email.

Oil producers in the Middle East have not yet announced a halt to any production or loading yet, and ports in the UAE, Oman and Kuwait remain operational, Bhattacharjee said, citing market sources.

“But most shipowners were avoiding transits through the strait of Hormuz after insurers cancelled the war risk coverage for vessels in certain areas of the region,” Bhattacharjee said.

It is estimated that roughly one-third of seaborne crude oil trade moves through the strategically important waterway, alongside 19% of global liquefied natural gas (LNG) flows and 14% of global refined products trade, according to Argus Media.

Leading maritime insurers have canceled war risk cover for vessels operating in the Middle East over recent days, amid reports of attacks on multiple ships traversing through the Strait of Hormuz.

Alongside the New York-based American Club, marine insurers including Norway’s Gard and Skuld, Britain’s NorthStandard and the London P&I Club said they were scrapping war risk cover for ships in the region.

Adrian Beciri, CEO of DUCAT Maritime, a Cyprus-based logistics firm specializing in dry bulk, said the knock-on effects of the sprawling Middle East conflict were being felt across the globe.

“We were trying to hire a dry bulk vessel to carry our typical rice food supplies to West Africa, which is around the Cape of Good Hope. You would think that is a million miles away from the conflict zone,” Beciri told CNBC’s “Squawk Box Europe” on Tuesday.

“We actually lost the ship. Someone had paid 50% more than they typically would do to carry coal from Indonesia to the west coast of India. Why did that vessel attract such a high rate? The answer is because the vessel owner was uncertain of getting cargo from the Persian Gulf area,” he continued.

“So, the consequences are far and wide, and this is potentially a double whammy. If we’re looking at the Hormuz closing and the Suez effectively being tampered with by the Houthis, this could be quite significant — much like what we saw during the Covid era and the attacks that were happening there.”

Even if oil tankers are only temporarily blocked from the Strait of Hormuz, it can ratchet up global energy prices, raise shipping costs and create significant supply delays.

The Strait of Hormuz is also key for global container trade. Ports in this region, such as Jebel Ali and Khor Fakkan, are specialized transshipment hubs that serve as intermediary points in global networks.

Shipping giants, including MSC, Maersk, Hapag-Lloyd and CMA CGM, have also issued fresh guidance, seeking to prioritize safety amid a deteriorating security situation.

Maersk, widely regarded as a barometer of global trade, said on Monday that it would suspend special cargo acceptance in and out of the United Arab Emirates, Oman, Iraq, Kuwait, Qatar, Jordan, Bahrain and Saudi Arabia until further notice.

It had previously said all sailings on the Middle East-India to Mediterranean and Middle East-India to east coast U.S. services would be rerouted around the Cape of Good Hope.

South Korean defense stocks saw massive gains on Tuesday after the country’s markets returned from a public holiday, as the Iran war fuels interest in defense names globally.

Heavyweight Hanwha Aerospace, which is South Korea’s largest defense manufacturer, saw shares surge 22%, while Korea Aerospace Industries gained more than 7%.

Shares in Lignex1, maker of South Korean air defense systems, soared 30%, while Victek and Firstec, which make electronic warfare systems and anti-aircraft missile components, respectively, rose more than 20%.

Ammunition manufacturer Poongsan was up 14%, while Hyundai Rotem, maker of the K2 main battle tank, was up over 18%.

The sector’s gains were in sharp contrast to the wider Kospi, which was down 2% and is currently leading losses in Asian markets.

South Korea’s prominence in the global defense space has been rising since the Ukraine-Russia conflict, with the country aiming to be the world’s fourth largest defense industry by 2030.

Orders from European nations such as Poland and Romania have powered massive gains in the sector as countries on the continent increase their defense spending.

Global defense stocks soared Monday as investors reacted to a dramatic military escalation in the Middle East.

In Europe, Germany’s Hensoldt and Britain’s BAE Systems were among the top performers in the Stoxx 600, up close to 5% and around 6%, respectively.

Stateside, U.S. firms Lockheed Martin and Northrop Grumman rose more than 3% and about 6%, respectively. 

— CNBC’s Elsa Olhen contributed to this report.

The first Emirates flight out of Dubai, United Arab Emirates, since the U.S. and Israel attacked Iran took off Monday night bound for Mumbai, India, flight data showed, hours after the airline got the green light from local authorities to resume a “limited number” of flights.

It’s a sign of how airlines are preparing to restart service to the region after thousands of flight cancellations.

Emirates flight EK500 departed at 9:12 p.m. local time, according to Flightradar24, a flight-tracking site. The flight was operated on an Airbus A380, the world’s biggest passenger plane.

Separately, Israeli airline El Al said Monday that it’s considering chartering private jets to bring stranded Israeli citizens home.

The announcements mark a potential improvement after air travel ground to a halt in a large swath of the Middle East over the weekend following the U.S.-Israeli strikes on Iran and subsequent retaliatory strikes.

The attacks shut airspace over a large part of the region, stranding hundreds of thousands of customers around the world and leading to thousands of canceled flights, including those who weren’t flying to and from the area since aircraft couldn’t transit those zones. Dubai is one of the busiest air travel hubs in the world.

The airport authority that owns and manages airports in Dubai said a small number of flights would be permitted to operate from Dubai International and Dubai World Central – Al Maktoum International, but advised travelers to check with their airlines.

For its part, Emirates said it will start operating a “limited number of flights” Monday night and urged customers not to go to the airport unless notified by the airline.

“We are accommodating customers with earlier bookings as a priority,” it said in a post on X. “All other flights remain suspended until further notice,” it said.

El Al said it is considering hiring KlasJet planes to take passengers from European airports to Aqaba, over southern border in Jordan, for customers of the airline. It previously considered flying in and out of Taba, Egypt, but later Monday said that plan was scrapped “due to the lack of approval from the security authorities in Israel.”

Abu Dhabi-based Etihad Airways said Monday that all commercial flights to and from the city are suspended until afternoon local time on Wednesday, though it could operating some cargo and repatriation flights “subject to strict operational and safety protocols.”