India Explores Emergency Fuel Measures as Hormuz Strait Disruption Threatens Supplies
India is actively evaluating several emergency measures to address the growing risk of fuel shortages should shipping through the critical Strait of Hormuz remain disrupted for an extended period. According to sources familiar with government-industry discussions, options under serious consideration include restricting exports of petrol and diesel, increasing crude oil purchases from Russia, and implementing demand-side interventions such as rationing LPG supplies for certain consumers.
Strategic Response to Geopolitical Tensions
While both the central government and oil companies maintain there is no immediate scarcity, refiners have already begun seeking alternative crude sources to offset supplies affected by the escalating conflict in West Asia. The geopolitical strain has driven up global oil and gas prices significantly. For India, which depends on imports for approximately 90% of its crude oil needs, this price surge translates directly into a higher import bill and adds substantial inflationary pressure to the economy.
The Strait of Hormuz, located in the Persian Gulf, represents one of the world's most vital maritime corridors for oil and goods transportation. A significant portion of India's energy imports originates in West Asia and must transit through this strategic waterway, making it vulnerable to disruption amid ongoing regional conflicts.
Potential Export Restrictions and Domestic Focus
With mounting concerns over potential crude oil availability disruptions, the government is reportedly considering measures to encourage refiners to direct a larger share of automobile fuels and LPG toward the domestic market by reducing exports. Authorities are simultaneously exploring ways to increase cooking gas production to ensure uninterrupted supplies for local consumers.
Currently, India exports approximately one-third of its petrol production, about a quarter of its diesel output, and nearly half of the aviation turbine fuel it manufactures. If necessary, refiners could redirect excess aviation fuel into alternative product streams. International Energy Agency data reveals that 5.9% of India's petroleum output was exported in 2023.
During the April-December 2025 period, the country shipped petroleum products worth nearly $330 billion to key markets including the Netherlands, the UAE, the United States, Singapore, Australia, and China. In 2024, petroleum gas exports totaled $454 million, primarily destined for Nepal, China, and Myanmar. The Reliance Industries Limited refinery at Jamnagar remains India's largest exporter.
LNG and LPG: Areas of Particular Concern
The most pressing area of concern is LPG, as India relies on imports to meet close to 65% of its consumption while maintaining relatively limited stockpiles. Approximately 85-90% of LPG imports originate from Gulf nations. Industry assessments indicate that existing inventories, including domestic storage and cargoes that have already passed through the Strait of Hormuz, would be sufficient for less than two weeks if fresh supplies are halted.
To prepare for such a scenario, major public sector undertakings including Indian Oil Corporation, Hindustan Petroleum Corporation Limited, and Bharat Petroleum Corporation Limited have started increasing LPG production at select refineries integrated with petrochemical units.
Officials are also examining focused demand-management strategies, including the possibility of rationing LPG for consumers who have access to alternative cooking fuels, particularly in rural regions. India's crude oil stockpiles are estimated to cover around 17-18 days of consumption, while reserves of refined products such as petrol and diesel could last approximately 20-21 days. LNG inventories are sufficient for about 10-12 days.
Diversification and Russian Crude Option
Increasing purchases of Russian crude represents another option being evaluated by Indian authorities. An industry executive noted that while any disruption could pose short-term challenges, Indian companies maintain a diversified LNG sourcing portfolio that includes supplies from the United States, with vessels routed via the Suez Canal.
"Even if there is a force majeure situation, we have other sources of supply which we can tap. Besides, no one is going to stop supplies indefinitely," the executive stated. Although oil and gas prices climbed significantly following recent developments, efforts remain focused on keeping supply chains operational.
Price Stability and Government Reassurance
Officials have indicated that pump prices of petrol and diesel are unlikely to be revised upward in the near term. Oil marketing companies continue to adhere to a calibrated pricing strategy, absorbing losses when international rates climb and recovering margins when they ease. Retail fuel prices have effectively remained frozen since April 2022.
Following Iranian drone strikes that damaged sections of a Saudi Aramco refinery and QatarEnergy's announcement of a temporary export halt, Petroleum Minister Hardeep Singh Puri convened an urgent meeting with senior officials and oil company representatives to review the status of crude and gas supplies.
The oil ministry stated in a social media message: "We are closely tracking the fast-changing developments and will take every necessary measure to maintain both the supply and affordability of key petroleum products across the country."
Support for Export Community
The government has sought to reassure exporters, affirming its readiness to extend necessary support and introduce flexible measures to ease trade operations amid uncertainty stemming from West Asian tensions. At a commerce department meeting chaired by special secretary Suchindra Misra and DGFT Lav Agarwal, exporters highlighted several areas of concern including:
- Risks to perishable consignments already in transit
- Escalating freight costs and demurrage charges
- Rerouting of shipments leading to longer transit times
- Dependence on imported inputs for exports
- Potential strain on loan repayments to financial institutions
Authorities are considering establishing a monitoring mechanism or round-the-clock control room to improve inter-agency coordination and swiftly address emerging challenges. The government reiterated its commitment to facilitating trade and signaled openness to granting procedural relaxations in instances of genuine disruption. It also indicated it would work closely with customs officials to ensure timely clearances and coordinate with banks and insurance companies to ease operational bottlenecks.
