NEW DELHI - India could find itself in a tight position if the US-Israeli war against Iran intensifies and the Strait of Hormuz, the narrow waterway between the Arabian Sea and the Persian Gulf, remains closed for any length of time.

The latest crisis erupted after the United States and Israel launched massive strikes against Iranian targets on Saturday, sharply escalating tensions across the region. Iran responded with strikes against US bases throughout the Middle East and by announcing the closure of the Strait of Hormuz, one of the world’s most critical energy chokepoints for global oil supplies.

For India, the stakes are high. About 2.6 million barrels per day, or almost half of its crude oil imports, come from major producers such as Iraq, Saudi Arabia, the UAE and Kuwait and transit via the Strait of Hormuz. India is the world’s third-largest oil consumer after the US and China and consumes about 5.6 million barrels per day.

 “Any disruption at the Strait of Hormuz would have immediate and significant implications for both India and global oil markets,” says Sumit Ritolia, Lead Research Analyst, Kpler, the data analytics company.

Crude oil prices have already been climbing throughout February as fears of a widening Iran-Israel-US conflict mounted. Prices rose by $8 from $64.99 on February 2 to $73 on February 28. Analysts say even the threat of disruption is enough to inject a geopolitical risk premium into Brent crude, pushing prices higher before any physical shortages materialise.

Iran, which had been preparing for possible Israeli and US strikes, is understood to have sent its large oil tankers out of the Gulf region more than a week ago. That move helped push its crude exports to their highest level since 2017, even as tensions skyrocketed.

The economic consequences for India could be immediate. As Ritolia explains: “Any disruption at the Strait of Hormuz would have immediate and significant implications for both India and global oil markets as roughly 2.6 mbpd of India’s crude imports transit the Strait, primarily from Iraq, Saudi Arabia, the UAE and Kuwait.”

Any blockade would likely trigger a “sharp geopolitical risk premium, driving Brent prices higher even before physical shortages materialise,” he added.

“For India, this would translate into higher import costs, freight and insurance spikes, potential short-term supply tightness, and pressure on the rupee and fiscal balances,” Ritolia said. However, he believes a prolonged full blockade remains a “low-probability scenario, given the economic dependence of Gulf producers, including Iran, on uninterrupted export revenues.”

In other words, while markets could see sharp volatility, a sustained shutdown of the waterway would hurt not only consumers like India but also the oil-exporting states themselves.

To cushion any shock, New Delhi has been working to broaden its sourcing strategy.

Ritolia says: “To secure supplies, India could draw on its strategic petroleum reserves, accelerate spot procurement from non-Hormuz regions, and deepen spot/term contracts with alternative suppliers.”

He said that diversification options include increased sourcing from Russia, the United States, Nigeria, Angola, Brazil, Colombia and Venezuela. But while these alternatives provide supply continuity, they come with higher freight costs compared to Middle Eastern barrels due to longer voyage distances, “which would modestly increase landed crude costs in the short term.”

India has already been in talks with producers such as the United States, Nigeria and Angola, as well as several Latin American countries.

Discussions have also been underway with Venezuela, although that country has limited spare capacity. Any shift to these suppliers would mean longer sailing times and higher transport costs. By contrast, Middle Eastern cargoes typically reach Indian ports within five to seven days, making them both logistically efficient and strategically vital.

Another key buffer lies closer to home. In 2024 and 2025, about 35 per cent of India’s crude imports came from Russia. Iraq was the second-largest supplier, followed by Saudi Arabia, whose oil is generally priced higher than Iraq’s.

India turned to Russia after the Ukraine war began, taking advantage of steep discounts that offset the additional freight costs of longer routes.

Since the Russia-Ukraine war started, European buyers, who had traditionally taken Russian crude, have competed more aggressively for Gulf supplies, tightening global markets and reshaping trade flows.

Ritolia notes: “A significant number of Russian barrels are currently floating in the Indian Ocean and Arabian Sea region, partly due to reduced Indian imports over the past few months. These floating volumes effectively act as near-term optional supply.”

That availability could give Indian refiners valuable room to manoeuvre if flows from the Gulf are disrupted. “In a scenario where Middle Eastern imports become constrained or show signs of disruption, Indian refiners — potentially with policy backing — could pivot back to Russian cargoes relatively quickly,” Ritolia said.

From a national energy security standpoint, this flexibility provides India “with an additional buffer against short-term geopolitical shocks.”

He adds: “The presence of alternative barrels in nearby waters reduces the risk of a sustained oil crisis.”

Even in a worst-case scenario, he believes any interruption would probably be limited in duration. “If we observe signs of reduced crude flows or lower transit volumes through the Strait of Hormuz — or even in the extreme case of a temporary blockade — the disruption is likely to be short-lived.

“Given the US military presence in the region and the combined maritime capabilities of GCC countries, any major obstruction would probably be addressed within a few days rather than becoming a prolonged event.”

Overall, while a closure of the Strait of Hormuz would create immediate volatility in global markets and strain India’s import bill, diversified sourcing, strategic reserves, and the availability of Russian barrels in nearby waters give New Delhi a measure of resilience against a prolonged supply crisis.

If there were sustained physical obstruction of the Strait for months, global markets would tighten significantly, inventories would fall, and prices could spike sharply, potentially well above recent levels.

The bigger long-term risk would be economic strain from persistently high oil prices rather than running out of crude altogether.