India’s Oil Supply Risk Rises as 52% of Imports Pass Through Hormuz: S&P Global

The recent US-Israeli strikes on Iran and the disruption to tanker movements through the Strait of Hormuz have put the spotlight on India’s strategic petroleum reserves, which remain below the stockpile levels recommended by the International Energy Agency, according to analysts and refining sources cited in a report by S&P Global.

While India’s recent strategy to diversify crude sourcing could offer some buffer in the near to medium term, the country remains highly exposed to disruptions in the Middle East, given its heavy reliance on oil imports from the region.

India imports roughly five million barrels per day (b/d) of crude oil, and about 52% of those imports pass through the Strait of Hormuz. This makes the waterway critical for the country’s energy security. Key suppliers routed through the channel include Iraq, Saudi Arabia, the UAE, Kuwait and Qatar, according to data from S&P Global Commodities at Sea.

Currently, India does not import crude oil from Iran.

India’s dependence on shipments passing through the Hormuz corridor has increased in recent months, partly due to a decline in purchases of Russian crude.

“It’s noteworthy that India’s exposure to Hormuz flows was lower at 41% in 2025 but has increased in recent months as Indian refiners have reduced their Russian crude purchases to average around 1.15 million b/d in the first two months of 2026, compared with 1.7 million b/d in 2025,” said Benjamin Tang, head of liquid bulk at S&P Global Commodities at Sea.

Russian crude shipments to India typically move through the Suez Canal and the Red Sea. Thus, offering an alternative supply route outside the Persian Gulf chokepoint. However, Tang cautioned that Middle Eastern volumes remain large enough that any prolonged conflict could significantly disrupt oil flows.

India's Strategic Petroleum Reserves Below Global Benchmark

India’s strategic petroleum reserves currently provide about 9.5 days of net oil import coverage. In addition to these reserves, state-run oil companies maintain storage facilities for crude oil and petroleum products equivalent to 64.5 days of total net imports, bringing India’s total national storage capacity to around 74 days of net imports, according to data from the petroleum ministry.

In comparison, IEA member countries are required to maintain oil stocks equivalent to at least 90 days of net imports.

India became an associate member of the IEA in 2017. In 2024, ministers from IEA member countries agreed to begin discussions with India regarding full membership, recognising the country’s growing role in global energy and climate policy.

Industry experts say India’s current reserves are sufficient to manage any short-term disruption, though a prolonged conflict in the region could put the country’s energy strategy under pressure.

“The current levels of Indian SPR stocks are comfortable for India to tide over any immediate crisis. There is no immediate cause for worry. But a long-drawn Iran crisis could have implications on prices and on the market,” said H.P.S. Ahuja, former CEO of Indian Strategic Petroleum Reserves.

India established its first phase of strategic reserves at three locations with a combined capacity of 5.33 million tonnes: 1.33 million tonnes at Visakhapatnam, 1.5 million tonnes at Mangalore, and 2.5 million tonnes at Padur in Karnataka.

Under the second phase of expansion, the government plans to add 6.5 million tonnes of additional storage capacity, including 4 million tonnes at Chandikhol in Odisha and 2.5 million tonnes at Padur.

“If the Iran war or the Hormuz choke point prolongs, it will be the time to stress test how effective India’s SPR strategy is,” said B. Anand, industry expert and former CEO of Nayara Energy.

Tushar Bansal, senior director at consulting firm Alvarez & Marsal, said that combined refinery stocks and SPR reserves should be sufficient to manage short-term disruptions. “In case of a prolonged closure, India’s SPR strategy will come into focus. Between the refineries and SPRs, there are enough reserves to manage any short-term disruption of needs,” he said.

Oil Prices Rise After Military Escalation

Oil markets reacted sharply following the joint air strikes on Iran by the United States and Israel on Feb. 28, and Tehran’s subsequent retaliatory attacks across the Middle East.

During Asian trading on March 2, crude futures strengthened as markets priced in the rising geopolitical risk. At 10:14 AM Singapore time, the ICE May Brent futures contract was trading $3.43 higher, or 4.71%, at $76.30 per barrel, while the NYMEX April light sweet crude contract rose $2.81, or 4.19%, to $69.83 per barrel.

Security officials also reported that several tankers with Iranian or Western links were attacked in the Persian Gulf and the Gulf of Oman on March 1. In response, the International Maritime Organization urged shipping companies to avoid conflict zones.

Macroeconomic Risks for India

Analysts say the immediate impact for India is likely to be price-driven rather than supply-related. However, prolonged instability could significantly affect the country’s broader economic outlook.

Rajat Kapoor, managing director for oil and gas at Synergy Consulting, said the crisis highlights the importance of diversifying energy supplies and strengthening strategic reserves.

“With over 88% of its crude requirements met through imports, a large share sourced from OPEC producers, any sustained disruption in the region would directly inflate India’s energy import bill, widen the current account deficit, and exert pressure on inflation and the rupee,” Kapoor said.

Even without a full closure of the Strait of Hormuz, heightened geopolitical risk premiums could push global oil prices higher, compounding fiscal and macroeconomic pressures on the Indian economy.

Also read: Crude Shock for India: Oil Prices Surge as Hormuz Crisis Deepens