India Proactively Addresses Energy Security Amid Rising Iran-US Tensions
With escalating tensions between Iran and the United States and growing fears of potential conflict, India has initiated comprehensive measures to secure its critical energy supplies. The geopolitical situation has prompted New Delhi to evaluate multiple contingency plans to ensure uninterrupted access to crude oil and liquefied natural gas (LNG).
Strategic Importance of the Strait of Hormuz
Iran has recently signaled the potential temporary closure of sections of the Strait of Hormuz, the narrow maritime gateway connecting the Persian Gulf to open seas. This vital waterway witnesses nearly 20% of global crude oil movement, making it one of the world's most crucial energy transit points.
Any restriction on cargo movement through this strategic passage could significantly impact India's energy imports. The country sources crude oil and LNG from multiple West Asian nations including Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Qatar, and Oman—all of which rely on the Strait of Hormuz for exports.
India's Energy Dependence and Diversification Efforts
India imports approximately 90% of its crude oil requirements, amounting to nearly 5.5 million barrels per day (mbpd). More than 40% of these imports originate from West Asian countries and transit through the Strait of Hormuz.
Officials have revealed that if the Strait of Hormuz were to close, India would explore partial supply security through two key alternative routes:
- The 360-kilometer Habshan-Fujairah strategic oil pipeline, operated by Abu Dhabi National Oil Company (Adnoc) with a capacity of 1.5 mbpd
- The 1,200-kilometer East-West crude oil pipeline, controlled by Saudi Aramco with a substantial capacity of 5 mbpd, providing access to the Red Sea
Recent Import Trends and Strategic Preparedness
While India purchased nearly one-third of its crude requirements from Russia over the past three years, recent trends indicate that Moscow's share has begun to decline. Conversely, India's crude purchases from Saudi Arabia have reached a six-year high this month, reflecting ongoing diversification efforts.
New Delhi has systematically diversified its crude imports in recent years and maintains strategic petroleum reserves that could last up to 74 days under normal consumption patterns. This buffer provides crucial breathing room during supply disruptions.
Expert Perspectives on Potential Impacts
Energy expert Narendra Taneja emphasized that "Our main worry is not the availability of crude, but that prices may go up globally" in the event of Strait of Hormuz disruptions. This sentiment was echoed by Prashant Vasisht, Senior Vice President and Co-Group Head of corporate ratings agency ICRA, who quantified the potential financial impact: "For every increase of $10 a barrel, India's annual import bill would rise by $13-14 billion."
However, Taneja offered a cautiously optimistic perspective, noting that "the situation may not come to that pass" and suggesting that closure of the Strait of Hormuz would likely be unacceptable to both the United States and Gulf oil-exporting nations, potentially preventing such a scenario from materializing.
India's proactive approach to energy security demonstrates the country's recognition of its vulnerability to global geopolitical developments and its commitment to maintaining economic stability through strategic planning and diversified supply chains.
