The escalating conflict between Israel and Iran is casting a shadow of uncertainty over India's oil imports, raising concerns about potential disruptions and price volatility. As tensions rise in the Middle East, particularly surrounding the Strait of Hormuz, India, a major oil importer, is taking steps to mitigate risks and ensure its energy security.
The Strait of Hormuz, a narrow waterway between Iran and Oman, is a critical chokepoint for global oil trade. Approximately one-fifth of the world's oil and a significant portion of liquefied natural gas (LNG) pass through this strait daily. With Iran threatening to close the strait in response to recent Israeli and U.S. actions, the potential for supply disruptions has increased significantly.
India relies heavily on the Strait of Hormuz for its oil imports, with about 40% of its crude oil and half of its gas transiting through this route. Any closure could lead to substantial supply shortages and price increases, impacting the Indian economy. Experts have warned that a blockade could push international oil prices to $120-$130 per barrel or even as high as $400 per barrel in extreme scenarios.
In response to these threats, India has begun to diversify its oil sourcing strategy. A significant increase in crude oil imports from Russia has been observed, surpassing the combined volumes from traditional Middle Eastern suppliers like Saudi Arabia and Iraq. In June 2025, imports of Russian crude are expected to reach 2 to 2.2 million barrels per day, the highest in the last two years. This shift is driven by the availability of discounted Russian oil and a strategic move to reduce dependence on the volatile Middle East region. Imports from the United States have also seen a notable rise.
India's Minister of Petroleum and Natural Gas, Hardeep Singh Puri, has stated that the majority of India's oil imports no longer pass through the Strait of Hormuz, thanks to diversification efforts. He also assured that oil marketing companies have reserves sufficient for several weeks and are actively securing supplies from various routes.
Further bolstering India's energy security are its Strategic Petroleum Reserves (SPR), stored in underground rock caverns in Andhra Pradesh, Karnataka, and Tamil Nadu. These reserves, holding millions of metric tonnes of crude oil, act as a buffer against supply disruptions and price shocks. Additional SPR sites are also under development in Odisha and Karnataka.
Despite these measures, the situation remains delicate. The conflict has already led to increased freight rates and insurance premiums for shipments from the Middle East. Shipowners are reportedly hesitant to send tankers into the Gulf, leading to a decline in vessel activity and potentially tighter supplies in the near term.
The Indian government is closely monitoring the geopolitical situation and is prepared to take necessary steps to ensure stable fuel supplies for its citizens. While a complete blockade of the Strait of Hormuz is considered unlikely, the heightened risk necessitates a proactive and diversified approach to oil sourcing and strategic запас management.
