The de facto shutdown of the Strait of Hormuz — with tanker traffic collapsing to fewer than 10 vessels a day in March from about 135 in February — is triggering a fresh supply shock for India. Over 90% of the country’s LPG imports, 50–55% of crude inflows and nearly 60% of LNG supplies routed through the critical energy corridor are at risk.
The disruption has already begun to choke supply flows. Middle East crude loadings have fallen sharply to 7.4 million barrels per day from 17.3 million bpd, tightening availability and forcing Indian refiners to turn to alternative, costlier sources. “Global energy markets are under severe stress… the Strait is a key energy artery,” said Pulkit Agarwal of S&P Global Energy, pointing to both immediate supply shortages and longer-term geopolitical risks.
Beyond Crude
LPG remains the most vulnerable segment, with limited short-term substitution alternative supply options . The challenge is compounded by the need for specific propane-butane blends required for domestic consumption.
Crude supplies have been partially rerouted, with refiners increasing purchases from Russia, the US and West Africa. However, longer voyage times and higher freight costs are pushing up landed prices and compressing refining economics. “There is a shortage of the right crude at the right place,” Agarwal said, highlighting supply mismatches.
India’s crude oil basket prices have surged sharply since the onset of the West Asia conflict, touching $156.29 per barrel on March 19.
While prices eased on Friday after Europe and Japan signalled support for securing shipping routes through the strait the US outlined measures to boost supply, crude continued to trade above the $100 per barrel mark, indicating persistent market tightness.
The LNG market too is facing a parallel squeeze, which implies a large shortfall for India, said Suyash Pande of S&P Global Energy. Global competition for cargoes has intensified. “Spot LNG prices have nearly doubled,” Pande said, adding that India is now competing with other Asian buyers, while attracting cargoes from the US or West Africa requires higher prices and longer delivery timelines.
Shipping constraints have further compounded the crisis. Rahul Kapoor of S&P Global Energy described the situation as a “black swan event,” warning that “shipping is a vulnerable link” and tanker movements remain exposed to geopolitical risks. The disruption is also spilling into petrochemicals, with prices of key products in India rising 31–67% amid feedstock shortages and supply disruptions.
“The industry is facing a triple whammy,” said Stuti Chawla of S&P Global Energy, citing halted Middle East imports, reduced Asian supplies due to force majeure, and domestic output cuts to prioritise LPG. She added that the impact is beginning to cascade downstream. “Several units are shutting down,” she said, warning of spillover effects on packaging, automobiles, paints and pharmaceuticals.
The Qatar Factor
The pressure on India’s energy supplies has intensified further after a missile strike hit key LNG infrastructure in Qatar. The attack on Ras Laffan Industrial City has reduced export capacity by around 17%, with recovery expected to take years, according to QatarEnergy.
This has direct implications for India, which sources nearly half of its LNG imports from Qatar. Damage to facilities linked to global majors such as ExxonMobil and Shell has triggered prolonged supply disruptions, tightening an already stressed market.
For India, the crisis is forcing a dual response — rapid diversification of supply sources and demand-side adjustments — while exposing a structural vulnerability: heavy dependence on a single corridor for critical energy imports in an increasingly volatile geopolitical environment.