Strait of Hormuz Crisis: Why India’s Fuel Supply Has Remained Stable So Far

Even as tensions in West Asia continue to disrupt global energy markets following the closure of the Strait of Hormuz, India has managed to maintain stable fuel supplies by rapidly diversifying crude oil imports and increasing purchases from multiple global sources.

Speaking on the sidelines of an event organised by the S&P Global India Research Chapter, Pulkit Agarwal, Head of India Content at S&P Global Energy, said India’s refining system has remained resilient despite the growing geopolitical uncertainty.

“What we have seen happen over the past two months is India really diversified its own energy buying. India bought a lot of Russian oil that was floating around, that was the first thing that India did,” Agarwal told ANI.

“And then India really went out in the market and started buying oil really from all kinds of sources that were available to buy. And that has kept the refining system running,” he added.

Why Is the Strait of Hormuz So Important for India?

The Strait of Hormuz is among the world’s most critical energy chokepoints, handling a substantial share of global crude oil and LNG shipments. For India, which imports the majority of its crude oil requirements, disruptions in the region pose a serious challenge to fuel security and pricing stability.

Agarwal said the closure of the strait has significantly affected global energy systems and downstream fuel markets.

“There's a whole lot that's happening in the energy markets right now with the closure of Strait of Hormuz and that's really impacting Indian energy system and really downstream from the energy system as well quite significantly,” he said.

Despite the disruption, India’s refineries have continued operating at strong levels.

He said India’s refinery run rates remain at “a very robust level”, helping the country meet domestic fuel demand even as international oil flows remain turbulent.

How Has India Adapted Its Crude Buying Strategy?

According to Agarwal, India’s biggest strength during the crisis has been its flexibility in sourcing crude oil from different regions.

Traditionally, India has relied heavily on Middle Eastern suppliers because of shorter shipping timelines and logistical efficiency. However, the ongoing crisis forced Indian buyers to quickly expand sourcing beyond conventional suppliers.

“India as a country is a very efficient buyer of energy,” Agarwal said, explaining that crude shipments from the Middle East usually take “about 7 to 10 days” to reach India.

The increased purchase of discounted Russian crude, coupled with aggressive spot-market buying from other available suppliers, has helped India avoid major supply disruptions.

Does India Have Enough Strategic Oil Reserves?

While India has managed the immediate crisis effectively, Agarwal highlighted a key vulnerability — the country’s relatively limited strategic petroleum reserves.

Unlike countries such as China, Japan and South Korea, India has not built massive long-term oil storage systems capable of cushioning prolonged supply shocks.

“India did not build up the kind of strategic storages that we have seen some of the other Asian countries, big Asian economies like Japan, Korea, China built up. So that is where we are lacking in terms of energy storage,” he said.

Agarwal described larger reserves as the “smartest strategy” in an ideal scenario, though he acknowledged that building such infrastructure requires enormous investments in storage facilities as well as crude procurement.

Why Haven’t Fuel Prices Risen Sharply in India Yet?

Even though global crude prices have surged amid geopolitical tensions, Indian consumers have so far been insulated from the full impact.

“The consumer is really shielded from some of the vagaries of the market,” Agarwal said while discussing domestic fuel prices.

This cushioning has largely been enabled through government pricing strategies, refinery adjustments and inventory management, even as international crude benchmarks continue to remain volatile.

However, Agarwal cautioned that oil prices could rise further if the crisis continues.

“As per their base case... they feel that the oil prices could be somewhere about 120-130 in a couple of months and receding from there,” he said.

How Long Could Global Oil Markets Take to Recover?

Agarwal warned that even if geopolitical tensions ease immediately, global oil markets would not stabilise overnight.

“If the war stops today, oil markets... does not function on a flip of a switch,” he said.

According to him, Middle East energy flows may still take “10-20 weeks” to begin returning to some level of normality because of shipping disruptions, supply-chain adjustments and logistical realignments.

The remarks underline the scale of uncertainty currently gripping global energy markets and the challenge facing import-dependent economies like India in balancing fuel security, pricing stability and long-term energy resilience.

(With inputs from ANI)