By B Ashok
When the Strait of Hormuz closed in 2026, India’s energy system faced its most severe test. A substantial share of India’s crude imports and the overwhelming majority of its liquefied petroleum gas had transited that single waterway. Within weeks, non-Hormuz crude sourcing had expanded to 70% and the system held firm without significant shortages. That outcome was not a crisis-era improvisation. It was the fruition of a decade-long commitment to supply diversification, built through methodical decisions made years before the test came.
In the early years of the industry, refineries were configured for specific grades of crude from identified suppliers, while energy security was largely equated with long-term contracts. Over time, that philosophy evolved. The focus shifted from dependence on a few trusted suppliers to building resilience through diversification.
By 2026, India sourced crude from 41 countries, up from 27 two decades earlier. That reflected a deliberate institutional choice. But diversification involved far more than signing contracts with additional suppliers.
It required procurement systems capable of working across different regulatory environments, customs procedures and commercial practices. Refineries had to process crude from widely different geographies, managing variations in API gravity, sulphur content, acidity and product yields. Logistics teams developed relationships with new ports, shipping companies and trading partners, while quality assurance systems adapted to different testing standards. Over time, this created invaluable institutional knowledge: which suppliers could respond quickly, which ports handled specific cargoes efficiently and how payment and currency risks could be managed across jurisdictions.
This work was painstaking and often increased costs in the short term. Parallel supply chains, unfamiliar relationships and operational complexity offered little immediate commercial benefit. What they created instead was strategic flexibility—the ability to switch between suppliers, shipping routes and crude grades when disruption struck. Every relationship developed in normal times became an option during crisis.
Infrastructure expanded alongside supplier diversification. LPG import terminals doubled from 11 in 2014 to 22 by 2026. Refineries became capable of handling multiple crude streams, while an extensive network of pipelines and more than one lakh fuel retail outlets strengthened distribution. Each new terminal and pipeline reduced dependence on any single route or entry point. Together, these investments transformed a linear supply chain into a diversified network capable of rerouting supplies when required.
When Hormuz traffic was disrupted, non-Hormuz crude sourcing increased from 55 per cent to 70 per cent because the commercial relationships, logistics systems and refinery configurations had already been tested during peacetime. The operational friction had been resolved long before the crisis. That preparedness rarely attracts attention, but it explains the speed with which the system rebalanced.
Supply diversification alone did not solve India’s energy challenge. Policy interventions on LPG production, allocation and pricing, together with diplomatic engagement with Gulf partners, were equally important. What diversification achieved was the removal of an entire category of vulnerability. By the time policy decisions were taken, the energy system had already begun adjusting through alternative suppliers and established logistics networks. The foundation had been laid years earlier; policy built upon it.
For policymakers and corporate leaders, the lesson extends well beyond the energy sector. Resilience begins with diversification wherever critical supplies depend on a single geography or route. The institutional capacity to manage that complexity cannot be improvised during a crisis. It is built patiently over years through investments in relationships, infrastructure and operational capability.
During my time at Indian Oil, the question we repeatedly asked was not whether to diversify but how quickly we could build the institutional capacity to do so credibly. That investment in peacetime made the response in 2026 possible. The cost of creating redundancy before a crisis is invariably lower than discovering a chokepoint after one. Strategic energy security begins with that discipline, embedded in every major sourcing decision and continually strengthened as the geopolitical landscape evolves.
(The author served as Chairman of Indian Oil Corporation)