Half of India's monthly oil supplies at risk as US-Israel strike on Iran raises Hormuz disruption fears

A plume of smoke rises following an explosion in Tehran. (Courtesy: AFP photo)

India’s oil supplies face a renewed risk of disruption after the US and Israel launched an attack on Iran on February 28. The escalation raised concerns of a broader conflict that could disrupt the Strait of Hormuz, a key passage for India’s crude oil imports.

A blockade of the Strait of Hormuz will affect as much as 50% of India’s monthly total imports, analysts say.

“A disruption at the Strait of Hormuz would have immediate and significant implications for both India and global oil markets, as roughly 2.6 million bpd of India’s crude imports transit the Strait, primarily from Iraq, Saudi Arabia, the UAE and Kuwait,” Sumit Ritolia, lead research analyst, refining and modelling at Kpler, said.

As of January-February, around 50% of India’s total monthly oil imports pass through the Strait of Hormuz, up from 40% in November-December 2025, Kpler data shows.

Sources said that in case of any blockade of the Strait, India could explore securing crude routed through bypass infrastructure such as Saudi Arabia’s East-West pipeline (to the Red Sea) and the UAE’s Abu Dhabi Crude Oil Pipeline (to Fujairah), both designed to circumvent the Strait of Hormuz.

However, Ritolia cautioned that while these pipelines reduce transit risk, their capacity is finite and prioritised for producer export strategies, meaning they can mitigate but not fully offset a major Hormuz disruption. “Access would depend on producer allocation decisions and commercial negotiations,” Ritolia said.

The US and Israel, in a joint operation, launched an attack on Iran with plans to carry out several days of intensive attacks, officials from the US and Israel said.

US President Donald Trump in a video shared on Truth Social said that the US had launched “major combat operations" ‌in Iran.

"Our objective is ‌to defend ‌the American people by eliminating imminent threats from the Iranian ⁠regime," Trump said in the video.

To secure its oil supplies, India is accelerating its purchases of crude oil from alternative suppliers, deepening its term-contracts while drawing up its strategic petroleum reserves amid rising Gulf tensions, sources privy to the matter told Moneycontrol.

India’s crude purchases through the Strait of Hormuz have increased in the past two months touching 2.6 million barrels per day as of February (month till date) against 2 million bpd last year as the country stepped back from Russian oil imports and turned back to its traditional suppliers in the Middle East, data from data and analytics firm Kpler showed.

India might have to turn back to securing Russian oil which is already facing western scrutiny if it loses access to the Middle Eastern grades.

Last year, the US sanctioned major Russian oil producers Rosneft and Lukoil. US President Donald Trump while announcing the India-US deal also said that India has agreed to stop purchasing oil from Russia.

Diversification options include increased sourcing from Russia (via eastern routes or via the oil on water around India), the United States, West Africa (Nigeria, Angola), Latin America (Brazil, Colombia, Venezuela), noted Kpler.

“While these alternatives provide supply continuity, they come with higher freight costs compared to Middle Eastern barrels due to longer voyage distances, which would modestly increase landed crude costs in the short term,” Ritolia said.

Kpler data showed India imported 1.15 million bpd of Russian oil as of February (month till date) against 1.09 million bpd in January. Imports from Iraq, however, declined to 942,000 bpd against 1.02 million bpd last month while Saudi Arabia has exported 1.11 million bpd so far compared to 774,000 bpd in January.

Total imports as of February (month till date) stood at 5.47 million bpd against 5.14 million bpd last month and 4.78 million bpd in February 2025.

The escalation of the conflict in the Gulf has also raised concerns over higher oil prices.

“Any blockade would likely trigger a sharp geopolitical risk premium, driving Brent prices higher even before physical shortages materialise. For India, this would translate into higher import costs, freight and insurance spikes, potential short-term supply tightness, and pressure on the rupee and fiscal balances,” Ritolia noted.

“About 20% of the world's oil or petroleum liquid consumption passes through the Strait of Hormuz and that is why it will have a broader impact for entire energy markets,” said Prashant Vasisht, senior vice president and co-group head, corporate ratings, Icra Ltd.

A Strait disruption would also affect India’s refined product exports, particularly to markets in the Middle East and East Africa that rely on Hormuz-linked trade routes, analysts said.

While India could redirect some cargoes westward (Europe, Africa) or eastward (Asia-Pacific), shipping times and freight rates would rise, as per Ritolia.

As per Kpler’s data, India exported 74,000 bpd of refined products via the Strait of Hormuz so far this year against 55,000 bpd exported in 2025.