Iran’s threat of closing down the Strait of Hormuz following the US airstrike on its three of the nuclear sites has erupted concerns over disruption of oil flows globally. India, too, could face severe oil supply challenges as the country is dependent on the route for most of its crude supplies emerging from the Middle East.
Nearly two-fifths of India’s crude supply remains exposed to risks from a potential Hormuz disruption.
“Strait of Hormuz is a major oil transit point accounting for more than 13 million bpd of oil and petroleum products trade. A closure could be catastrophic for the global oil markets including for India, as the country is dependent on the strait for the majority of its Middle-Eastern energy flows,” Pulkit Agarwal, Head of India Content, S&P Global Commodity Insights told FE.
In 2024, oil flow through the strait averaged 20 million barrels per day, or the equivalent of about 20% of global petroleum liquids consumption, according to the US Energy Information Administration.
Flows through the Strait of Hormuz in 2024 and the first quarter of 2025 made up more than one-quarter of total global seaborne oil trade and about one-fifth of global oil and petroleum product consumption.
EIA estimates that 84% of the crude oil and condensate and 83% of the liquefied natural gas that moved through the strait went to Asian markets in 2024. China, India, Japan, and South Korea were the top destinations for crude oil moving through the Strait of Hormuz to Asia, accounting for a combined 69% of all Hormuz crude oil and condensate flows in 2024. “These markets would likely be most affected by supply disruptions at Hormuz,” EIA said.
However, analysts and industry players see a very low probability of a full blockade but a short-term sabotage operation that disrupts flows for 24–48 hours.
That said, while India could face a serious energy security challenge if the strait were to close, its growing diversification of crude sourcing primarily from Russia, West Africa, Brazil, and the US is said to help the country mitigate this risk and manage the fallout.
Ritolia notes that India could also ramp up spot purchases from non-Gulf producers, in such a case, but it may increase the freight costs by $1.50–$3.00/bbl from the Atlantic Basin. It could also lead to tighter tanker availability due to longer voyages and delivery windows.
“Geopolitical tensions could lead to increased freight and insurance costs and introduce short-term volatility in crude procurement for Indian oil companies. However, most firms have adapted to it by securing long-term contracts with varied suppliers and maintaining operational buffers. Public and private refiners are also increasingly hedging their crude mix to handle such uncertainties,” said Kapil Garg, Founder & Managing Director, Oilmax Energy.
Union Minister of Petroleum and Natural Gas Hardeep Singh Puri last week said that India is reviewing the global oil supply situation and the emerging tensions on a daily basis and the country has sufficient domestic stocks available.
Kpler data shows that India has 9–15 days’ worth of import coverage in strategic and commercial stocks. These could be used in the short term to absorb immediate disruptions, though they are not a sustainable long-term substitute.
Ritolia pointed out that Indian refiners must continue to prioritize scenario planning, import flexibility, and energy diplomacy to safeguard long-term supply security.
Furthermore, while India’s direct reliance on the Strait of Hormuz for petroleum product exports is minimal, a closure or sustained high tensions in the region can still significantly impact the country’s export performance, particularly through indirect disruptions and market realignments.
While only a fraction (44 kbpd) of Indian refined exports pass directly through Hormuz, redistribution hubs like the UAE and Singapore play a critical role in reaching end-users in Asia and Africa. This makes regional stability in the Gulf strategically important, even for exports not directly routed through the strait, Kpler noted.
As a result, India’s export of petroleum products that bounced back to 1.34 mbd in May, up 31% from 1.02 mbd in April, could face a hit.
Following the development, crude oil prices were hovering around $77-78/bbl on Monday. Experts are expecting Brent to “remain upwards of $75/barrel in the near term.” An increase in crude oil prices could further dampen profitability of the downstream companies and increase the country’s import bill as India imports as much as 88% of its crude oil requirements.
“In the event of tensions escalating, world crude prices could rise above $100 a barrel, raising India’s oil import bill and the trade deficit and contributing to inflationary pressure. Oil companies could get impacted by increased procurement costs and margin squeezes, prompting the government to intervene on pricing, subsidies, and fiscal burdens,” said Jitendra Srivastava, CEO of Triton Logistics & Maritime.