NEW DELHI: Escalating tensions in West Asia have disrupted fuel shipments through the strategic Strait of Hormuz, raising alarm across energy-importing nations. The immediate concern is how countries dependent on crude imports will meet their fuel demand if the disruption continues.
India, however, currently holds an estimated 100 million barrels of crude oil in reserves, sufficient to meet domestic demand for about 40 to 45 days. The development comes amid fears that the Strait of Hormuz, the world’s most critical oil transit chokepoint, could remain shut due to the intensifying Iran–Israel conflict. India imports nearly 88 per cent of its crude oil requirements, with more than half sourced from West Asia. Any prolonged closure of Hormuz could therefore have significant consequences for the country’s energy security.
Strategic chokepoint disrupted
The Strait of Hormuz serves as a vital corridor through which nearly one-third of the world’s seaborne oil supply passes. Reports indicate that almost 86 per cent of the usual crude flow to South Asia, including India, has been affected by the current disruption.
The scale of the crisis is reflected in shipping data. More than 700 oil tankers are reportedly stranded on either side of the narrow waterway. On March 1, only three tankers carrying around 2.8 million barrels of crude oil managed to transit through the strait. By March 2, traffic had slowed further, with just one small tanker and a small cargo vessel passing through.
The sharp decline in vessel movement has intensified concerns about the continuity of crude supplies to major Asian importers. For India, which is the world’s third-largest oil importer, the closure presents a serious strategic challenge. About 20 per cent of global liquefied natural gas (LNG) supplies also transit through Hormuz, adding to the global energy risk.
Despite the alarming developments, energy analytics firm Kepler estimates that India’s existing crude reserves, stored in above-ground tanks, strategic underground caverns, and oil tankers already en route, total approximately 100 million barrels. According to Kepler, these reserves could cushion the country against supply disruptions for roughly six weeks.
Reserves offer short-term cushion
India’s strategic petroleum reserves are located at Mangalore, Padur, and Visakhapatnam. These facilities were designed precisely to buffer the economy against sudden supply shocks or geopolitical disruptions.
Sumit Ritolia, Lead Research Analyst at Kepler, noted that while the reserves provide short-term relief, they are not a long-term solution if the Strait of Hormuz remains closed for an extended period. “A prolonged disruption could cause significant volatility in petrol and diesel prices,” Ritolia warned, emphasising that the reserves are intended for temporary crises rather than sustained supply blockages.
Following earlier tensions between Iran and the United States, crude prices had already surged by around 10 per cent. Now, with uncertainty deepening in the region, global benchmark Brent crude has crossed $80 per barrel.
Although India does not face an immediate supply shortage, rising international crude prices could increase the country’s import bill. Higher costs may eventually be passed on to consumers in the form of increased petrol and diesel prices, placing pressure on inflation and household budgets.
Alternative supply routes and Russian option
If the Strait of Hormuz remains shut for an extended period, India will need to diversify its sourcing strategy. Apart from traditional West Asian suppliers, India can turn to West Africa, Latin America, and the United States. However, shipping from these regions involves longer transit times and higher freight costs. Russia has emerged as a key alternative supplier in recent years. India has already increased purchases of discounted Russian crude since the onset of Western sanctions against Moscow. Military analysts have suggested that if direct military action in Iran were to occur, it might be relatively short-lived. Some estimates indicate that active hostilities may not extend beyond four weeks. India’s current reserve capacity roughly aligns with that timeframe, offering a limited but crucial window of resilience.
Meanwhile, the central government and oil marketing companies are closely monitoring developments. Officials are reportedly reviewing contingency measures, including the possibility of regulating LPG supplies if required.
India has prepared an emergency crude supply plan to mitigate the impact of extended disruptions. Despite earlier signals of reducing Russian oil imports, policymakers are now believed to be actively reconsidering that position in light of the current crisis. Increasing supplies from Russia may prove essential to stabilising energy availability if instability in the West Asia persists.
Energy security experts caution that while physical shortages may be avoided in the near term, sustained high global crude prices would pose economic challenges.
As Brent crude remains above $80 per barrel, any further escalation in conflict could push prices significantly higher.
In such a scenario, India’s import costs would rise sharply, potentially widening the trade deficit and exerting pressure on the rupee. Domestic fuel prices could also increase, affecting transport costs, industrial production, and overall economic stability. For now, India’s strategic reserves provide breathing space. However, the situation remains fluid, and the coming weeks will determine whether the crisis remains a short-term disruption or evolves into a prolonged energy emergency.
