Onmanorama Explains | Oil stock not India's worry but price & supply disruption as Iran blocks Strait of Hormuz
Various reports quoted officials as saying that India has enough stock reserves which can last up to 74 days to meet demands during crisis.
Various reports quoted officials as saying that India has enough stock reserves which can last up to 74 days to meet demands during crisis.
Various reports quoted officials as saying that India has enough stock reserves which can last up to 74 days to meet demands during crisis.
India may not have immediate concerns over crude oil stock even though Iran's Revolutionary Guards have blocked the 'Strait of Hormuz', the crucial oil export corridor, in the wake of US-Israel attack. While Iran has not officially confirmed issuing any such order, an official from the European Union's naval mission Aspides told Reuters that vessels have been receiving VHF transmission from the Iranian guards saying 'no ship is allowed to pass the Strait of Hormuz'.
What's India's worry?
Various reports quoted officials as saying that India has enough stock reserves which can last up to 74 days to meet demands during crisis. Officials have told media that Indian refineries put together hold anywhere between 10-15 days of crude inventories, in tanks and transit. Fuel requirements for another 7-10 days in the country can be easily met, an official told PTI. India wouldn't want the conflict to continue longer for other reasons.
Almost 50% of India's crude oil and 60% of LNG arrive through the Strait of Hormuz. If this gets stalled, the effect is manifold. Disruption in supply means spike in cost of import, insurance and freight, Sumit Ritolia, lead research analyst at Kpler told TOI. This will also lead to potential short-term supply crunch, pressure on the rupee and fiscal balances.
Even without physical shortage, increased crude costs would translate into higher import bills, PTI report showed. Ritolia also cited in the PTI report that India's dependence on Middle Eastern barrels has increased as refiners have pivoted away from a portion of Russian volumes. This has increased the weight of Gulf-origin crude in India's import basket.
Trading Economics portal also flags warning signs. "Oil prices are poised to surge when trading resumes Sunday night, following unprecedented US and Israeli strikes on Iran that have sharply escalated tensions in the Middle East. The developments have heightened fears of disruptions to global energy supplies, particularly as Iran blocked Strait of Hormuz traffic. Shipping companies swiftly began diverting vessels away from the narrow channel along Iran’s southern border that serves as a critical transit route for roughly one-fifth of the world’s oil and substantial volumes of natural gas," the report showed.
India is the world's third biggest importer of oil. Price fluctuations could spell devastating impact for India. Analysts said that if conflict continues, crude oil prices may peak to $100 a barrel and this will be a grave financial risk for the country. Former Canadian Envoy Vikas Swarup, precisely echoed these concerns in an interview with ANI.
"India has strong stakes in economic and energy stabliity of the Middle East. Large part of oil supplies come from that region, any war can be hugely destablising for us. It has the potential to spike up oil prices. 85% of oil is imported from outside and any price volatility will affect the Indian economy," he said. An article published in the Energy Connects portal shows that oil prices have already climbed to six-month highs ahead of the strikes on Saturday.
Alternatives and challenges
In 2025, India diversified its crude oil imports. It increased the suppliers from 27 to 40. The Ministry has repeatedly stressed country's efforts to secure oil supplies from multiple sources. Besides, the government has implemented various initiatives to boost domestic oil production and reduce dependence on foreign crude. This is being done by promoting natural gas usage as a fuel and feedstock, encouraging renewable and alternative fuels such as ethanol, second-generation ethanol, compressed bio-gas, and biodiesel, Union Petroleum Minister Hardeep Singh Puri had said.
According to S&P Global Commodity Insights, India’s refined crude demand will peak later than in other major economies, positioning the country as a key driver of global oil consumption. While alternative fuels are gradually reshaping the energy landscape, fossil fuel usage is expected to remain significant in the foreseeable future. The firm forecasts that India’s refined product demand will reach 5.7 million barrels per day (b/d) by 2026, a report published by DD News shows.
India has diversified supply across Russia, the US, West Africa and Latin America with Argentina being the latest entrant in 2025. Prolonged closure could force India to tap diversified supply. But it has challenges. PTI report shows that barrels from the Atlantic Basin involve substantially longer voyage durations - typically 25 to 45 days compared to 5 or 7 days from the Gulf. Also experts point out that although supply continuity could be ensured through diversification, it leads to higher freight exposure and longer supply chains. India would be at a logistical disadvantage if the conflict grows leading to a sustained blockade in the Strait of Hormuz.