India is unlikely to face a major oil crisis even if Iran decides to shut the Strait of Hormuz, despite the critical role this narrow waterway plays in global energy supplies. The Strait of Hormuz, bordered by Iran, Oman, and the UAE, is a vital route through which about 20% of the world’s oil and a significant amount of liquefied natural gas (LNG) flow. For India, around 40% of its crude oil and nearly half of its gas imports pass through this strait. Yet, thanks to careful diversification and proactive energy strategies, India remains better positioned than in the past.
Over the last two years, India has significantly diversified its oil import sources. While it still imports about 90% of its crude oil needs, India has steadily reduced its dependence on the Middle East. Instead, it has ramped up purchases from countries like Russia, the US, and Brazil. In fact, recent data shows that in June, India imported over 2.1 million barrels per day (bpd) of Russian crude, a figure higher than the combined imports from Middle Eastern suppliers such as Saudi Arabia and Iraq. Russian oil now accounts for more than 35% of India’s total crude imports, a massive jump from under 1% before the Ukraine war began in 2022.
This surge in Russian oil imports was largely driven by steep discounts on Russian crude, as Western sanctions following the Ukraine invasion left Russia with limited buyers. India capitalised on the situation, securing cheap oil to meet its vast energy needs. At the same time, imports from the US have also grown. In June, India purchased about 439,000 bpd from the US, up from 280,000 bpd in May. This increase highlights India’s expanding ties with transatlantic suppliers and its commitment to reduce reliance on any single region.
Imports from the Middle East have shown a dip, with June estimates standing at around 2 million bpd, down from earlier months. Analysts attribute this to growing concerns over regional instability and shipping risks. According to Kpler’s Sumit Ritolia, shipowners are showing increased hesitation in sending tankers to the Gulf, leading to a drop in tanker activity and a possible short-term decline in crude loadings from the region.
While military tensions between Iran and Israel have raised alarms, actual oil supplies have not yet been disrupted. Nevertheless, oil prices could spike in the short term, potentially reaching $80 per barrel or more. India, however, is well-prepared to handle any such fluctuations. Russian crude, for instance, bypasses the Strait of Hormuz, being routed through the Suez Canal, Cape of Good Hope, or the Pacific Ocean. Similarly, oil from West Africa, the US, and Latin America—although slightly more expensive—offers reliable alternatives.
As for LNG, India’s key supplier, Qatar, does not use the Strait of Hormuz to ship gas to India. Other major LNG sources such as Australia, Russia, and the US are also unaffected by any closure. This ensures a relatively stable supply of natural gas, even in the event of regional disruptions.
India also maintains strategic petroleum reserves that can cover around 9 to 10 days of imports. In an emergency, these reserves could be released to cushion any supply shocks. The government could also intensify imports from Brazil, Angola, and Nigeria, despite higher freight charges. Additionally, temporary subsidies might be used to keep domestic fuel prices—especially for diesel and LPG—under control and protect consumers from inflationary pressure.
Union Petroleum Minister Hardeep Singh Puri recently stated that India is closely monitoring the situation in the Middle East. He reassured that the country’s energy security is under control, and global oil prices have not surged beyond manageable levels. With its current strategies in place, India appears confident in navigating through this geopolitical storm without facing significant energy disruptions.
