New Delhi: With Iran’s Parliament approving a potential closure of the Strait of Hormuz following US airstrikes on its nuclear facilities, India faces a possible disruption to over one-third of its crude and more than 40 per cent of its LNG imports. The move raises supply chain risks for one of the world’s most crucial oil and gas trade routes, through which ~20 mb/d of global oil and ~290 mmscmd of LNG pass daily, according to a report by YES Securities.
India imported 23.4 million metric tonnes (~5.5 mb/d) of crude in May 2025. Of this, more than 2 mb/d—over 35 per cent —comes through the Strait. Additionally, India sources about 42 per cent (11.4 mmt) of its LNG from Qatar, whose exports are entirely reliant on the passage.
Russian crude imports into India, which reached 2.2 mb/d in June 2025, now exceed the combined inflows from Middle Eastern nations. Volumes from the US (~0.44 mb/d), West Africa, Brazil, and Latin America bypass Hormuz altogether, offering alternative sourcing routes via the Suez Canal, Cape of Good Hope, or the Pacific Ocean.
India’s evolving import strategy offers some resilience. Refiners such as Reliance and Nayara, which export over 1.3 mb/d of petroleum products, rely on discounted Russian grades and diversified logistics. Meanwhile, state-run companies like IOCL, BPCL and HPCL have gradually expanded their crude sourcing base.
A temporary closure of Hormuz could trigger short-term freight rate surges and crude price volatility. YES Securities said Brent crude could rise beyond USD 80–85 per barrel in case of sustained disruption. However, a full closure remains unlikely due to potential impacts on Iran’s own exports and diplomatic ties with major buyers such as China.
For India, Saudi Arabia’s ability to reroute oil via the Petroline–Yanbu corridor on the Red Sea offers continuity. India imports 18–20 per cent of its crude from Saudi Arabia, a portion of which can still be accessed even if the Strait is blocked.
In the gas sector, India’s LNG supply is less vulnerable structurally, with imports also coming from Australia, Russia (Yamal, Arctic LNG), and the US. But the heavy reliance on Qatar LNG via Petronet LNG (~7.5 mmtpa contracted) introduces exposure to delays, spot procurement, and price spikes. QatarEnergy has asked tankers to delay Gulf entry, signalling caution.
Asian spot LNG prices have already increased by ~11 per cent week-on-week to USD 14/mmbtu. For Petronet LNG, any shipment disruption could impact regasification volumes and margins.
India holds crude reserves for about 90 days, of which strategic petroleum reserves can bridge ~9–10 days of imports. Pricing policy tools, such as duty cuts and subsidies, offer additional levers to handle inflationary pressure. However, oil marketing companies (OMCs) face margin pressures, with FY26 LPG under-recovery estimated at Rs 28,000 crore.
Standalone refiners like CPCL and MRPL may gain from diesel crack spreads but could face input cost pressure. ONGC and Oil India’s upstream exposure could support earnings if crude prices rise.
Market participants expect that Iran may not enforce a full blockade, instead opting for limited disruptions lasting 24–72 hours. Even short-lived blockages, however, could strain tanker availability and elevate geopolitical premiums.
India’s diversified import mix, strategic reserves, and refining flexibility serve as key buffers as the country monitors developments in the Gulf. The situation continues to evolve with the final decision on closure pending with Iran’s Supreme National Security Council.
