India’s energy security is under fresh strain as the West Asia conflict threatens to choke crude flows through the Strait of Hormuz, a narrow passage that handles roughly a fifth of global oil trade. With more than half of its crude imports coming from the Middle East and relatively thin stockpiles compared with other major Asian economies, India is widely seen as the most exposed if disruptions persist.
Brent crude surged around 7 percent on Monday after Israeli and US strikes on Iran escalated tensions in the region. Analysts warn that a prolonged closure or severe disruption in Hormuz could push global oil prices sharply higher, amplifying inflationary pressures in oil-importing economies such as India.
As of January, the Middle East accounted for about 55 percent of India’s crude imports, equivalent to nearly 2.74 million barrels per day. This is the highest share since late 2022, reflecting a gradual reduction in Russian oil purchases amid geopolitical pressure and changing trade dynamics.
India’s vulnerability stems not only from its import dependence but also from limited storage buffers. China is estimated to hold around six months’ worth of crude in storage, while India’s reserves are far lower. Official data presented in Parliament last month suggested that India has the capacity to store crude and fuel sufficient for about 74 days. However, refining sources indicate that operational inventories currently cover only around 20 to 25 days.
In contrast, Japan and South Korea — both heavily dependent on Middle East crude — maintain significantly larger stockpiles. Japan’s reserves cover over 250 days of consumption, while South Korea’s inventories can meet demand for more than 200 days, according to officials.
For India, the immediate risks are threefold:
Higher import bills if crude sustains above $80 a barrel
Upward pressure on retail fuel prices and inflation
Strain on the rupee due to widening trade deficits
The Centre has indicated it will take all necessary steps to ensure adequate fuel supplies at affordable rates. One potential option could be to recalibrate sourcing strategies, including increased purchases from alternative suppliers if logistics and pricing permit. However, in a tight global market where countries compete for incremental barrels, options may be limited.
Even though Europe and the US import relatively smaller volumes of Middle East crude, any prolonged disruption would raise global benchmark prices, affecting all major economies. For India — the world’s third-largest oil consumer — the stakes are particularly high. A sustained shock to energy supplies could ripple across growth, inflation and fiscal balances, just as the economy navigates external headwinds.
