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India needs contingency plans to ensure oil supply amid Strait of Hormuz uncertainty
India imports nearly 90 per cent of its crude oil, half of it passes through Strait of Hormuz; local refineries only hold a fortnight’s crude inventories in tanks and in transit
- PUBLISHED: Tue 3 Mar 2026, 6:00 AM UPDATED: Tue 3 Mar 2026, 5:00 PM
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Oil prices rose sharply following the escalation of US-Israel war on Iran. Add to this the uncertainty over the closure of the Strait of Hormuz, and India must put in place contingency plans to ensure energy supply.
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India imports nearly 90 per cent of its crude oil, and half of it passes through the Strait of Hormuz, according to Kpler vessel tracking data. About 60 per cent of its liquefied natural gas (LNG) imports also moves through the Strait, and almost all of its imported liquefied petroleum gas.
A government official told media on Monday that Indian refineries hold nearly a fortnight’s crude inventories in tanks and in transit. All the fuel tanks are full, meeting nearly 10 days of the country’s requirements, he said. “For now, we think the closure of the Strait of Hormuz will not be very long," he added.
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While officials in Delhi rule out prospects of immediate disruption of supplies, there are fears of higher crude prices, which could fuel inflation.
Major disadvantage
India can get crude oil from Venezuela, Brazil, West Africa and the US, besides of course, Russia. The major disadvantage though is the time it takes to get the crude from the distant countries. While it takes just about five days to get supplies from the Gulf, supplies from Russia take almost a month.
"India had cut purchases from Russia in response to US pressure, but we can go back to buying from Moscow in case there is disruption in the Middle East," an official was quoted in the media. "The only question is transit time. It takes five days for a ship from the Middle East to travel to India, while it takes at least a month for those coming from Russia. So, it is a question of placing orders well in time."
Jump in prices
An analyst with Kpler noted that if India were to import crude from other parts of the world, there would be a spurt in prices, freight and insurance costs. Crude prices have jumped by more than $12 per barrel following the Iran crisis, the highest since July 30, 2025. Crude oil prices surged by more than 10 per cent on the Multi-Commodity Exchange of India, following the US-Iran conflict.
Kpler analyst Sumit Ritolia told the media that crude oil dependency is the beginning and possibly the easiest to tackle. “The second involves natural gas, half of which comes from overseas in the form of liquefied natural gas, predominantly from the Gulf. The third, or the central prong is LPG, nearly all of which comes from West Asia, which is used for cooking by most Indian households in urban centres.”
Prashant Vasisht, senior vice president at ratings agency Icra, said that as Iran and West Asian energy producers straddle the Strait of Hormuz, a prolonged and/or widening conflict involving several oil and gas producers could adversely impact global crude oil and LNG supplies.”
However, there are some analysts who believe India will be able to overcome the crude oil crisis. “We are prepared and continuously look out for suitable sources but will have to brace for supply and price challenges in the short term,’’ Krishnakumar, former chairman, Bharat Petroleum, told Business Standard.
