Brent crude prices surged to a five-month high of $81.40 per barrel on Monday following the US air strikes on three Iranian nuclear facilities. Though prices have stabilised since then and the Strait of Hormuz remains open, volatility is likely to persist in oil and gas markets, explains Prashant Vasisht
l Consumption and production of crude oil & natural gas in India
INDIA’S TOTAL DEMAND for crude oil was 265.7 million tonnes and production 28.7 million tonnes in FY2025 leading to an import dependence of about 89%. The demand for petroleum products is expected to grow by 3-4% in
FY2026 even as domestic crude oil production is likely to remain stable.
In the case of liquified natural gas (LNG), India’s total domestic demand was about 195.4 million metric standard cubic meters/day and domestic production was about 97.5 mmscmd in FY2025 thus leading to an import dependence
of about 50%. The demand for natural gas is expected to grow by 4-6% in FY2026 and domestic gas production is expected to grow to about 100 mmscmd only. Thus, the dependence on LNG imports is expected to remain high at 52% of consumption.
India’s import bill for oil rose by 2.7% during FY2025, reaching $137.0 billion compared to $133.4 billion in FY2024.
l Key countries from where India buys crude oil & natural gas
INDIA SOURCES CRUDE oil from several countries including Russia, Saudi Arabia, Iraq, UAE, etc. Russia accounted for 36% of India’s crude imports in FY25, Iraq 20% and Saudi Arabia 13%. In the case of natural gas/LNG, Qatar accounted for 41% of India’s imports in FY25 followed by US at 19% and UAE at 13%. Russia has become India’s top oil supplier, with volumes rising from 1.74 million barrels per day (January–April) to 1.99 mbd (May–June), as per Kpler.
Oil imports from the US, West Africa and Brazil have also grown as India seeks to diversify its sourcing. In recent years, more than 50% of its crude oil imports have originated in the Middle East. In 2023, nearly 40% of its crude oil requirements were met by Russian imports. US barrels have also gained momentum, with India on track to import over 1 mbd across April-June 2025.
l Why the Strait of Hormuz is crucial
ABOUT 20 mbd of oil, equivalent to about a fifth of the world’s oil demand, pass through the Strait of Hormuz of which more than 80% comes to Asia. Additionally, about 20% of the world’s LNG supplies pass through the strait. Flows through the Strait in 2024 and Q1 2025 made up more than one-quarter of total global seaborne oil trade and about one-fifth of global oil and petroleum product consumption, as per the US Energy Information Administration. It estimates that 84% of the crude and 83% of the LNG that moved through the strait went to Asian markets in 2024.
l Likely impact on India’s imports
ABOUT 45% OF India’s crude oil and 54% of LNG imports pass through the Strait. The Strategic Petroleum Reserves and domestic oil companies have only about 74 days of oil inventory combined. Roughly 39% of India’s crude imports in recent months—1.73-1.83 mbd—have transited via Hormuz, as per data analytics provider Kpler.
While there are other sources of oil such as Russia, Nigeria, Brazil and the US, a 20% reduction in global oil and gas supply in the event of any closure of the Strait of Hormuz by Iran would impact prices and restrict options.
l Looking for other sources is crucial
OPTIONS SUCH AS boosting domestic oil and gas production or expanding green energy production would take years to bear fruit. In the short term, crude oil and gas would have to be sourced from other regions.An expanding conflict in the Middle East is a cause of concern for crude oil and natural gas prices. Any surge in the prices would be detrimental for India as it relies on imports to the extent of 88% of its crude oil consumption and 45% of its natural gas consumption.
The writer is senior vice president and co-group head, corporate ratings, Icra