The Pulse | Economy | South Asia

Gulf War 3.0: How Is India Securing Its Oil Supplies?

India’s limited reserves, thin domestic production capacity, and mounting oil import dependence leave it extremely vulnerable should the war in West Asia continue.

India, the world’s third largest consumer of crude oil, which is heavily reliant on imports to meet its oil requirements — imports account for nearly 87 percent of its consumption — now finds itself in a vulnerable position as the war in West Asia intensifies.

According to a Standing Committee on Petroleum and Natural Gas report released in December 2024, over 60 percent of Indian crude oil imports come from countries in the Persian Gulf, mainly Iraq, Saudi Arabia, Kuwait, and the UAE — countries that have been drawn into the war. Crude from these countries is carried in tankers and must cross the Strait of Hormuz to enter the Arabian Sea and then reach India.

The 2024 report was prophetic; it warned that India’s dependence on any one region for crude oil and gas poses a risk to its energy security, necessitating immediate steps toward greater diversification. The report also noted that due to the Indian government’s concerted efforts at diversification of crude oil sourcing in recent decades, dependence on the Gulf for crude imports had significantly reduced from 72 percent in 2017-18 to 63 percent. Yet India remains heavily dependent on the Gulf region for its oil supplies. It is also worth noting that while India has been able to expand its basket of oil suppliers from 27 countries (in 2006-07) to 40, its refineries are designed for crude coming from West Asia.

With the war in West Asia escalating,  India’s reliance on the Strait of Hormuz — which is now effectively closed to commercial shipping due to Iranian attacks — to transport this oil into the Arabian Sea is an additional vulnerability.

Before the outbreak of the Iran war, roughly half of India’s crude imports used to come through the Strait. In a statement made to the Lok Sabha, India’s Minister for Petroleum and Natural Gas Hardeep Singh Puri explained that India has increased non-Hormuz sourcing to approximately 70 percent of crude imports, up from 55 percent before the war began. Although the minister did not share details on how this was achieved, it is likely attributable to India’s increased purchases of Russian oil, which is generally shipped through the Mediterranean, the Suez Canal, and the Red Sea to reach the Indian west coast, bypassing the West Asian sea routes.

According to local media reports, Indian refiners are also negotiating for additional crude cargoes from the United States and West Africa, in addition to Russia.

India reportedly purchased 30 million barrels of Russian crude at premiums of $2 to $8 per barrel over the Brent benchmark, in stark contrast to the heavily discounted rates being offered before the outbreak of hostilities in West Asia. This came after the U.S. granted India a 30-day waiver to “allow” imports of Russian oil stranded at sea, in a bid to stabilize global oil market prices. Indian purchases of Russian oil — which peaked following the outbreak of the Russia-Ukraine war in 2022 — dropped markedly in January, largely due to U.S. pressure, which included a 25 percent punitive tariff on Indian goods imported to the U.S., for transactions with Moscow. Last month, India implicitly agreed to end Russian oil purchases in exchange for a trade deal with Washington. Before the outbreak of war in West Asia, these purchases were expected to continue to decline.

Now that Washington is offering this waiver to all countries, several East Asian countries, including Japan, are looking to buy Russian oil, and Indian refiners are likely to face stiff competition to secure Russian oil supplies amid surging global crude oil prices.

Meanwhile, India has been trying to secure guarantees from Tehran to ensure safe passage for 27 Indian flagged ships stranded in the Persian Gulf.

On March 11, a Liberia-flagged tanker carrying crude from Saudi Arabia docked in Mumbai, making it the first India-bound vessel to navigate through the Strait of Hormuz since the start of the war. The ship reportedly turned off its Automatic Identification System — this broadcasts the vessel’s identity, location and other key details to other ships and monitoring authorities — to evade identification and detection, a move considered highly risky as it increases the chances of being hit by another ship. Notably, the same day, a Thai bulk carrier heading for Kandla port in Gujarat was attacked while transiting the Strait of Hormuz.

More recently, Tehran’s Ambassador to India Mohammad Fathali confirmed that Iran has ​allowed some Indian vessels to sail through the Strait of Hormuz. This comes after New Delhi gave harbor to three Iranian warships on Tehran’s request, and multiple high-level interactions, including at least three conversations between India’s Minister for External Affairs S. Jaishankar and his Iranian counterpart, Abbas Araghchi and a telephone conversation between Indian Prime Minister Narendra Modi and Iranian President Dr. Masoud Pezeshkian on March 12. On March 14, the Indian Ministry of Shipping confirmed that two Liquefied Petroleum Gas (LPG) carriers owned by the Shipping Corporation of India had successfully crossed the Strait, reportedly under the surveillance of the Indian Navy.

Currently, New Delhi has strategic petroleum reserves of 5.33 million metric tons, which is expected to meet its crude oil requirements for about nine-and-a-half days. In addition, Oil Marketing Companies (OMCs) have storage facilities for crude oil and petroleum products for 64.5 days, which is still below the minimum 90-day stockpile required to be maintained by International Energy Agency (IEA) members (India is an associate member). For comparison, Japan’s oil reserves will meet ​254 days of consumption, and South Korea’s reserves are expected to cover about 208 days.

India has not joined the recent IEA plan to release strategic oil reserves to address disruptions in oil markets stemming from the Iran war. In 2021, India released 5 million barrels of crude oil from its strategic reserves in an attempt to reduce soaring international oil prices. This time around, although India has issued a statement welcoming the IEA decision and said that it is “ready to take appropriate measures, as necessary, to support global market stability,” its recent decision not to release oil in global markets indicates that ensuring domestic supply is the government’s top priority.

Other steps taken by the Indian government domestically include ordering all oil refining companies to maximize LPG production, ensuring supply prioritization for domestic consumers by invoking the Essential Commodities Act. It has capped commercial LPG gas supply at 20 percent to prevent hoarding and price hikes. It has also reportedly reduced supplies to several industries, with cuts ranging from 10 to 30 percent, according to a Reuters report.

India has also stepped up its role to ensure the energy security of its neighbors. It supplied Bangladesh with 5,000 tons of diesel earlier this month, and is due to supply another 5,000 tons later this month. Other countries like Nepal and Sri Lanka have also reached out to India for the supply of additional fuel, which is currently being examined by the Ministry of External Affairs, taking into account “domestic energy requirement and availability.”

So far, fuel prices in India have remained relatively stable despite the volatility in the global oil market. Analysts predict that in the near term, retail prices are unlikely to rise as “oil marketing companies may absorb the impact through lower margins, which could lead to reduced profits.” However, India’s limited reserves, thin domestic production capacity, and steadily increasing oil import dependency — which rose to 88.5 percent in the first 10 months of the current financial year (FY-26) — leave it extremely vulnerable in the case of a prolonged conflict in West Asia, proving that diversification alone without boosting domestic production may not be enough.

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India, the world’s third largest consumer of crude oil, which is heavily reliant on imports to meet its oil requirements — imports account for nearly 87 percent of its consumption — now finds itself in a vulnerable position as the war in West Asia intensifies.

According to a Standing Committee on Petroleum and Natural Gas report released in December 2024, over 60 percent of Indian crude oil imports come from countries in the Persian Gulf, mainly Iraq, Saudi Arabia, Kuwait, and the UAE — countries that have been drawn into the war. Crude from these countries is carried in tankers and must cross the Strait of Hormuz to enter the Arabian Sea and then reach India.

The 2024 report was prophetic; it warned that India’s dependence on any one region for crude oil and gas poses a risk to its energy security, necessitating immediate steps toward greater diversification. The report also noted that due to the Indian government’s concerted efforts at diversification of crude oil sourcing in recent decades, dependence on the Gulf for crude imports had significantly reduced from 72 percent in 2017-18 to 63 percent. Yet India remains heavily dependent on the Gulf region for its oil supplies. It is also worth noting that while India has been able to expand its basket of oil suppliers from 27 countries (in 2006-07) to 40, its refineries are designed for crude coming from West Asia.

With the war in West Asia escalating,  India’s reliance on the Strait of Hormuz — which is now effectively closed to commercial shipping due to Iranian attacks — to transport this oil into the Arabian Sea is an additional vulnerability.

Before the outbreak of the Iran war, roughly half of India’s crude imports used to come through the Strait. In a statement made to the Lok Sabha, India’s Minister for Petroleum and Natural Gas Hardeep Singh Puri explained that India has increased non-Hormuz sourcing to approximately 70 percent of crude imports, up from 55 percent before the war began. Although the minister did not share details on how this was achieved, it is likely attributable to India’s increased purchases of Russian oil, which is generally shipped through the Mediterranean, the Suez Canal, and the Red Sea to reach the Indian west coast, bypassing the West Asian sea routes.

According to local media reports, Indian refiners are also negotiating for additional crude cargoes from the United States and West Africa, in addition to Russia.

India reportedly purchased 30 million barrels of Russian crude at premiums of $2 to $8 per barrel over the Brent benchmark, in stark contrast to the heavily discounted rates being offered before the outbreak of hostilities in West Asia. This came after the U.S. granted India a 30-day waiver to “allow” imports of Russian oil stranded at sea, in a bid to stabilize global oil market prices. Indian purchases of Russian oil — which peaked following the outbreak of the Russia-Ukraine war in 2022 — dropped markedly in January, largely due to U.S. pressure, which included a 25 percent punitive tariff on Indian goods imported to the U.S., for transactions with Moscow. Last month, India implicitly agreed to end Russian oil purchases in exchange for a trade deal with Washington. Before the outbreak of war in West Asia, these purchases were expected to continue to decline.

Now that Washington is offering this waiver to all countries, several East Asian countries, including Japan, are looking to buy Russian oil, and Indian refiners are likely to face stiff competition to secure Russian oil supplies amid surging global crude oil prices.

Meanwhile, India has been trying to secure guarantees from Tehran to ensure safe passage for 27 Indian flagged ships stranded in the Persian Gulf.

On March 11, a Liberia-flagged tanker carrying crude from Saudi Arabia docked in Mumbai, making it the first India-bound vessel to navigate through the Strait of Hormuz since the start of the war. The ship reportedly turned off its Automatic Identification System — this broadcasts the vessel’s identity, location and other key details to other ships and monitoring authorities — to evade identification and detection, a move considered highly risky as it increases the chances of being hit by another ship. Notably, the same day, a Thai bulk carrier heading for Kandla port in Gujarat was attacked while transiting the Strait of Hormuz.

More recently, Tehran’s Ambassador to India Mohammad Fathali confirmed that Iran has ​allowed some Indian vessels to sail through the Strait of Hormuz. This comes after New Delhi gave harbor to three Iranian warships on Tehran’s request, and multiple high-level interactions, including at least three conversations between India’s Minister for External Affairs S. Jaishankar and his Iranian counterpart, Abbas Araghchi and a telephone conversation between Indian Prime Minister Narendra Modi and Iranian President Dr. Masoud Pezeshkian on March 12. On March 14, the Indian Ministry of Shipping confirmed that two Liquefied Petroleum Gas (LPG) carriers owned by the Shipping Corporation of India had successfully crossed the Strait, reportedly under the surveillance of the Indian Navy.

Currently, New Delhi has strategic petroleum reserves of 5.33 million metric tons, which is expected to meet its crude oil requirements for about nine-and-a-half days. In addition, Oil Marketing Companies (OMCs) have storage facilities for crude oil and petroleum products for 64.5 days, which is still below the minimum 90-day stockpile required to be maintained by International Energy Agency (IEA) members (India is an associate member). For comparison, Japan’s oil reserves will meet ​254 days of consumption, and South Korea’s reserves are expected to cover about 208 days.

India has not joined the recent IEA plan to release strategic oil reserves to address disruptions in oil markets stemming from the Iran war. In 2021, India released 5 million barrels of crude oil from its strategic reserves in an attempt to reduce soaring international oil prices. This time around, although India has issued a statement welcoming the IEA decision and said that it is “ready to take appropriate measures, as necessary, to support global market stability,” its recent decision not to release oil in global markets indicates that ensuring domestic supply is the government’s top priority.

Other steps taken by the Indian government domestically include ordering all oil refining companies to maximize LPG production, ensuring supply prioritization for domestic consumers by invoking the Essential Commodities Act. It has capped commercial LPG gas supply at 20 percent to prevent hoarding and price hikes. It has also reportedly reduced supplies to several industries, with cuts ranging from 10 to 30 percent, according to a Reuters report.

India has also stepped up its role to ensure the energy security of its neighbors. It supplied Bangladesh with 5,000 tons of diesel earlier this month, and is due to supply another 5,000 tons later this month. Other countries like Nepal and Sri Lanka have also reached out to India for the supply of additional fuel, which is currently being examined by the Ministry of External Affairs, taking into account “domestic energy requirement and availability.”

So far, fuel prices in India have remained relatively stable despite the volatility in the global oil market. Analysts predict that in the near term, retail prices are unlikely to rise as “oil marketing companies may absorb the impact through lower margins, which could lead to reduced profits.” However, India’s limited reserves, thin domestic production capacity, and steadily increasing oil import dependency — which rose to 88.5 percent in the first 10 months of the current financial year (FY-26) — leave it extremely vulnerable in the case of a prolonged conflict in West Asia, proving that diversification alone without boosting domestic production may not be enough.

Rushali Saha is a New Delhi based independent researcher and foreign affairs columnist. She is currently working as a security risk analyst with Horizon Intelligence, a Belgium-based threat intelligence firm.

India energy security

India oil diversification

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