Oil's not well: Why war in West Asia affects India

While government has indicated that India has 50 days worth of crude stock and 20-30 days worth of LPG left, a long term closure of the Hormuz Strait will force refiners to diversify their options and may push up costs.

• India imports 40% of crude oil through Strait of Hormuz
• Brent crude prices briefly rose above $85 amid Gulf tensions
• India holds crude stocks covering 20–50 days, officials report

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As the geopolitical crisis involving the United States, Israel and Iran intensified over the last four days, concerns over India’s energy security have risen.

On Tuesday (March 3), global benchmark Brent briefly rose above $85 a barrel, its highest level since July 2024, while West Texas Intermediate traded around the mid-$70s.

The biggest flashpoint is the Strait of Hormuz. Iran’s Revolutionary Guards and state-linked messaging have declared the strait 'closed' and warned ships against transiting, as tanker traffic and insurance appetite tightened sharply amid attacks and threats.

Hormuz is not just another sea lane: the US Energy Information Administration estimates the strait carried about 20 million barrels per day in 2024, roughly 20 percent of global petroleum liquids consumption.

For India, the exposure is direct. Reuters has reported that about 40% of India’s crude imports typically pass through Hormuz.

India’s growing dependence

Provisional data from the Petroleum Planning & Analysis Cell (PPAC) show crude oil import dependence at 88.6% during April–January FY26, marginally higher than 88.2 percent in the same period of FY25.

For full-year FY25, import reliance was about 88.3%, Indian Express reported, citing PPAC trends.

India remains one of the key engines of oil-demand growth, pushed by transport fuels, rising vehicle ownership, aviation and petrochemicals. In fact, major forecasters have increasingly described India, not China, as the largest driver of global oil demand growth in the coming years, even though China remains the larger oil consumer in absolute terms.

India’s total refining capacity is about 258 million metric tonnes per annum, per government statements.

Stocks, buffers, and the pricing risk

Reuters has reported India’s crude and fuels inventories at roughly 20–25 days in the system, while noting officials have claimed higher coverage when strategic reserves and other buffers are counted.

Separately, a Moneycontrol report cited a government source saying India has 50 days of crude stock and 25–30 days of LPG stock.

Even if physical shortages don’t hit immediately, the first shock is usually price and shipping cost. JM Financial has estimated that every $1 per barrel increase in crude raises India’s annual import bill by about $2 billion.

That’s why a prolonged Hormuz disruption would force refiners to diversify sourcing and reroute cargoes, typically at a cost via higher freight, tighter insurance, and longer voyages, even before pump prices move.

The Ministry of External Affairs has warned that any major disruption in the Gulf has serious consequences for the Indian economy, while officials have said there is no immediate reason for panic buying.

India’s strategic crude reserves are managed by Indian Strategic Petroleum Reserves Limited (ISPRL), with storage sites at Visakhapatnam, Mangalore and Padur (near Udupi).