7 days till shutdown? Inside India’s multi-front stress test as the Gulf crisis deepens

India is now facing a multi-front ‘stress test’ due to the Strait of Hormuz closure and expanding war across the Gulf countries. 

The Parliament was informed on Monday that India held a 74-day reserve of oil and petroleum products. However, the crude devil is in the detail. Only 5.33 million metric tonnes (meant to provide about 9.5 days of crude oil requirement) is under direct government control while the rest is held by oil marketing companies. 

Additionally, India has no strategic reserves for LNG with an estimated stock of 10 to 15 days. LPG cooking gas stock is slightly higher at 20-25 days and non-Gulf supplies remain steady. 

The government has invoked the Essential Commodities Act and directed all refineries to “divert 100% of propane and butane streams away from petrochemical production and toward LPG”. By some estimates, plastic and chemical plants now hold inventory of less than seven days for its required raw materials.

The United States has also issued a “temporary 30-day waiver” giving Indian refiners “permission” to buy Russian oil. The move has also sparked significant backlash within the country — with officials insisting that India would take its own oil decisions.

Export cargo worth up to $1.5 billion is currently stranded at multiple locations and a dwindling supply of fertilizers for the upcoming Kharif (monsoon) sowing season. 

The successive closure of Ras Tanura (Saudi Arabia), BAPCO (Bahrain), and Ras Laffan (Qatar) has also hit the import of crucial petrochemical feedstocks for chemicals, paints, textiles, aviation turbine fuel and more.

Where does India get its oil?

India imported goods worth more than $98 billion from West Asia in 2025. Petroleum and liquefied natural gas formed the largest share — including about $50.8 billion of crude oil. The Gulf nations have only become more crucial to India over the past few months as the US pushed New Delhi to break away from Russian oil. 

Imports from the other country fell to a 44-month low in January 2026 as refiners turned to the Middle East and Latin America. Official data shows that crude oil imports from OPEC countries rose to 50.1% of total imports during April-January FY 2025-26.

India spent over $100 billion to import 206.3 million tonnes of crude oil between April 2025 and January 2026. 

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Strait of Hormuz closure

The Strait of Hormuz acts as the only available sea passage for roughly 20% each of global oil and LNG trade. It is used to ferry roughly 50% of Indian crude imports and a staggering 80% of its LPG supply. This critical energy jugular ‘closed’ on March 2 after the Iranian Revolutionary Guards threatened to set any vessel attempting transit on fire. 

Recent production closures across the Middle East compound the problem since it now means an actual ‘shortage’ of gasoline, diesel, and jet fuel — even if the Strait were to be cleared tomorrow.

The Petroleum Ministry told Parliament on Monday that India currently has a total capacity for storage of crude oil and petroleum products up to 74 days. This can help the country tide over disruptions in case the war stretches on for multiple weeks — as repeatedly suggested by US President Donald Trump.

Do Iranian strikes affect Indian energy exports?

QatarEnergy removed roughly 20% of the global LNG supply overnight after Iranian strikes forced a pause in production at Ras Laffan and Mesaieed last week The situation was significantly worse for India which imports more than 40% of its LNG supplies from Qatar. 

Then came the ‘temporary closure’ of Ras Tanura Refinery in Saudi Arabia. Yet another blow came on Monday as the BAPCO Refinery in Bahrain declared force majeure following drone strikes that set the premises ablaze.

Gulf countries hike oil prices

Multiple West Asian countries have also raised their official selling price amidst the conflict. This is separate from the global oil standards such as Brent or Dubai crude and acts as an ‘add-on cost’ to the Manufacturer’s Suggested Retail Price. Almost all Middle Eastern suppliers have now joined this ‘coordinated’ price hike amidst the war. 

Iraq became the latest entrant to this list on Monday —  raising the April official selling price for its Basrah ⁠crude sold to Asia. India is a major buyer of this Iraqi oil and will now be paying $2.00 more for each barrel even if global prices stayed unchanged. Other Gulf countries have introduced even steeper changes. Saudi Arabia raised its  April ‘Arab Light’ premium to Asia by roughly $2.50 while Kuwait announced a $2.10 hike. Meanwhile the Abu Dhabi Government-owned ADNOC has seen its market-linked prices surge by more than $2.20 during the past 10 days.

Russian oil offers a sharp (and very lucrative) contrast for India as it still comes at a flat discount amid continued Western pressure. 

Beyond the oil and energy crisis

45K Indian containers stuck; export costs increase fivefold

The Strait of Hormuz closure has also impacted Indian exporters beyond the looming oil ‘crisis’. According to a Business Standard report citing firms in the logistics sector, around 40,000-45,000 Indian containers are currently stranded at various locations. 

Many remain in transit while others are stuck at international ports. The future of export cargo worth around $1-1.5 billion is reportedly under clouds — with many staring at additional costs for diversions or even an u-turn to India. 

Concern for Indian fertilizer plants?

Indian oil and gas company Petronet LNG was forced to declare force majeure last week after LNG supplier QatarEnergy temporarily halted production. GAIL (India) Limited wrote in a regulatory filing last week that it was now “assessing the situation with respect to any supply curtailment that may need to be imposed on its downstream customer”. 

India uses natural gas primarily as feedstock for urea (fertilizer) production — with GAIL managing over 70% of this transmission network. So a prolonged shutdown from QatarEnergy would eventually hit the domestic fertiliser plants and leave the government facing a massive subsidy burden or a potential crop crisis.