THEBUSINESSBYTES BUREAU
NEW DELHI, MARCH 1, 2026
India is unlikely to face any immediate physical disruption in crude
supplies despite rising geopolitical tensions around Iran and the Strait of
Hormuz, but the country is preparing for the economic fallout of higher oil
prices and wider macroeconomic pressures, according to officials and industry
analysts.
Domestic refiners currently hold crude inventories sufficient to meet at
least ten days of demand, while fuel stocks can cover another five to seven days,
providing a short-term buffer against any sudden supply shock. This inventory
cushion, coupled with contingency sourcing plans, is expected to prevent any
immediate shortage in the domestic market even if shipping routes face
temporary stress.
Officials said India has already diversified its procurement strategy and
can draw additional supplies from the United States, West Africa, Latin America
and Russia if required. Strategic petroleum reserves may also be tapped to
stabilise supplies in the event of a prolonged disruption.
The Strait of Hormuz remains one of the world’s most critical energy
chokepoints, handling nearly a fifth of global petroleum liquids and about 20
per cent of global LNG trade. For India, the route is particularly vital, with
roughly 2.5–2.7 million barrels per day — about half of its crude imports —
passing through the narrow waterway. A significant share of these volumes
originates from Iraq, Saudi Arabia, the UAE and Kuwait.
While supply continuity appears manageable in the near term, analysts warned that any sustained escalation could push global crude prices higher, widening India’s current account deficit, fuelling inflationary pressures and complicating fiscal management. Higher import costs may also weigh on the rupee and increase the subsidy burden if retail fuel prices are not fully passed through.
Refiners and policymakers are closely monitoring developments, balancing supply security with price risk as global energy markets respond to the unfolding situation in West Asia.
