Business EconomyPosted at: Mar 11 2026 3:17PM


India's energy sector showing resiliency amid west asian unrest

By Sourav Shekhar
New Delhi, Mar 11 (UNI) The ongoing unrest in West Asia appears to be destabilising the global energy sector, raising concerns over disruptions in oil supplies through critical chokepoints such as the Strait of Hormuz and attacks on energy infrastructure.
In the midst of the crisis, the Strait of Hormuz, often described as the world's most important oil transit chokepoint, has come under renewed focus due to its central role in global energy trade.
According to estimates by the United Nations Conference on Trade and Development (UNCTAD), nearly 25 per cent of the world's seaborne oil trade and around 20 per cent of global liquefied natural gas (LNG) shipments pass through the narrow maritime corridor connecting the Persian Gulf with the Arabian Sea.
For India, the strategic waterway carries particular significance as nearly 40 per cent of the country's crude oil imports pass through the Strait of Hormuz.
Any prolonged disruption or complete closure due to military escalation could therefore have implications for India's energy security and supply chains.
However, India currently maintains a substantial energy buffer to manage potential supply disruptions. The country holds over 250 million barrels of crude oil and petroleum products — equivalent to roughly 4,000 crore litres — across its supply chain.
These reserves provide an estimated seven to eight weeks of buffer coverage.
The stocks are distributed across a wide network of storage infrastructure, including above-ground tanks, underground strategic petroleum reserve caverns, pipeline systems, terminal tankage, and offshore storage vessels.
Strategic petroleum reserves located at Visakhapatnam, Mangalore, and Padur further strengthen India's emergency preparedness.
Another mitigating factor is that only about 40 per cent of India's crude imports pass through the Strait of Hormuz, meaning nearly 60 per cent of supplies could remain unaffected even if the waterway faces disruption.
Over the past decade, India has significantly diversified its crude sourcing to reduce geopolitical risk. The country's supplier base has expanded from 27 to about 40 nations spanning six continents. Apart from Gulf suppliers, India now imports crude from Russia, West Africa, the United States, Central Asia, and other non-Gulf routes, providing flexibility in times of disruption.
New energy supply arrangements with partners such as the United States and the United Arab Emirates have also strengthened long-term supply security.
India's strong refining sector further provides resilience in the global energy landscape. With a refining capacity of around 258 million metric tonnes per annum (MMTPA), India is the fourth-largest refining hub in the world.
The capacity exceeds the country's domestic consumption of about 210–230 MMTPA, enabling refiners to process a wide range of crude grades while also exporting refined petroleum products to global markets.
Russia has emerged as India's largest crude supplier in recent years, particularly after 2022, when discounted Russian oil reshaped trade flows.
The shift has helped India secure supplies at competitive prices while diversifying sources away from traditional Gulf dependence.
Domestic energy initiatives are also helping moderate the impact of crude imports. India's ethanol blending programme has reached the 20 per cent blending level, displacing nearly six million tonnes of crude oil annually — equivalent to roughly 44 million barrels.
Since 2014, the programme has saved around Rs 1.36 lakh crore in foreign exchange while generating approximately Rs 1.18 lakh crore in income for farmers.
Despite these buffers, experts warn that sustained price spikes in global crude markets could significantly impact India's import bill and inflation outlook.
Karthik Ganesan, Fellow and Director Strategic Partnerships at the Council on Energy, Environment and Water (CEEW) said the latest price spikes and supply disruptions highlight India's continuing vulnerability to imported crude.
"The spike in prices and supply shocks once again brings to the fore India's tenuous relationship with imported crude oil. This must give us even more impetus to seek solutions to reduce our dependence on imported crude. Driving down demand for oil products from private mobility by pricing it appropriately and incentivising a slow shift to electric cooking and away from LPG in urban India can help alleviate the situation, even in the short to medium term," he said.
Ganesan also noted that if global crude prices remain elevated at around USD 115 per barrel, India's crude import bill could increase by nearly USD 6 billion per month for every month prices remain at that level.
The increase would represent roughly a 50 per cent jump in the current crude import bill, with petroleum imports already accounting for nearly 23 per cent of India's total import basket.
Coming on the expected inflationary trends on petrol and diesel prices, Ganesan said, " Price spikes and supply shocks once again expose India's vulnerability to imported crude. This should accelerate efforts to curb oil demand through better pricing of private mobility and a gradual shift from LPG to electric cooking in urban India."
Ganesan pointing towards an RBI research said that it suggested that a 10pc rise in global crude oil prices could raise headline inflation by about 20 bps (0.2pc increment).
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