Amidst escalating tensions in the Middle East, particularly the ongoing conflict between Israel and Iran, concerns are rising about potential disruptions to global oil supplies, especially concerning the Strait of Hormuz. This narrow waterway is a critical chokepoint through which a significant portion of the world's oil and liquefied natural gas (LNG) passes. For India, which relies heavily on imports to meet its energy needs, the security of this route is of paramount importance. However, India has been proactively diversifying its oil sources and taking strategic measures to mitigate the impact of any potential disruptions.
India imports approximately 90% of its crude oil, with over 40% of these imports originating from Middle Eastern countries, making it vulnerable to any instability in the region. Specifically, around 2 million barrels per day, of the 5.5 million barrels that India imports, transit through the Strait of Hormuz. Recognizing this dependency, India has strategically diversified its crude oil supply base, with Russia becoming a cornerstone, supplemented by supplies from the United States, Latin America, and West Africa.
In June 2025, India has ramped up its oil imports from Russia, surpassing the combined volumes from its traditional Middle Eastern suppliers like Saudi Arabia and Iraq. This shift is attributed to the discounted prices offered by Russia and the increasing market volatility due to the Israel-Iran conflict. Preliminary data indicates that Indian refiners are importing between 2.1 to 2.2 million barrels per day of Russian crude oil, the highest in the last two years.
Besides Russia, India has also increased its crude oil purchases from the United States. Imports from the U.S. have risen significantly, exceeding the combined volumes from Middle Eastern suppliers. This diversification strategy provides a buffer against potential supply disruptions from the Middle East, ensuring India's energy security.
To further safeguard its energy interests, India is also exploring alternative routes and LNG sources. Qatar, a primary gas supplier to India, doesn't rely on the Strait of Hormuz for Indian shipments. Additional LNG can be sourced from Australia, Russia, and the US, regardless of any potential closure of the Strait.
The Indian government is also taking steps to manage domestic supply and demand. Union Minister Hardeep Singh Puri stated that India plans to source crude oil from outside the Persian Gulf and cut its refined-product exports, if necessary, to maintain sufficient domestic stockpiles. The country also possesses strategic petroleum reserves that can be utilized in case of emergencies.
While these measures provide a cushion, potential disruptions could still lead to short-term price fluctuations. Some analysts predict that escalating tensions could push oil prices to $80 per barrel or even higher. A blockade could drive the oil price up and cause inflation. It's estimated that for every ten-dollar increase in the price of crude oil, India's GDP will suffer by 0.5 per cent.
Despite these concerns, global security analysts believe that an extended blockage of the Strait of Hormuz is unlikely, considering the presence of US naval forces in the region. The International Energy Agency (IEA) has also emphasized that any interference with the Strait's flow would significantly impact global oil markets. The situation remains highly fluid, and the impact of the conflict on energy infrastructure and logistics is not immediately clear. However, India is actively monitoring the situation and is prepared to take further action as needed.
