India’s energy supply chain through the Strait of Hormuz is under renewed focus after the United States said it would move to enforce a naval blockade targeting ships linked to Iran, following the collapse of talks between Washington and Tehran.
The US has indicated that the proposed action is not a blanket closure of the route and is aimed at vessels entering or leaving Iranian ports. The Strait of Hormuz remains open to other commercial traffic, and there is no official announcement of a complete shutdown of the waterway.
With India already facing energy strain amid the West Asia conflict, if the US pushes ahead with a naval blockade in the Strait of Hormuz, it could add to the pressure.
First things first, India’s imports of Iranian crude have remained negligible since 2019, when purchases were halted after US sanctions, although there have been limited recent cargo movements amid temporary waivers.
However, India depends heavily on imports from other Gulf producers such as Iraq, Saudi Arabia and the United Arab Emirates, with shipments moving through the same route.
Despite recent tensions, India-bound cargoes have continued to transit the strait. Iran has allowed passage to what it describes as “non-hostile” vessels, including India-bound shipments, although access has remained tightly controlled and reduced.
India’s direct dependence on Iranian crude remains negligible, but recent reports indicate Iranian crude cargoes have reached Indian waters, according to media reports, pointing to limited or opportunistic flows amid the current crisis.
There is, however, no clarity on whether Iran’s current approach to allowing “non-hostile” vessels would continue if the United States moves ahead with enforcement of its proposed naval blockade.
Tanker movement through Hormuz is continuing, although some vessels have delayed or reassessed routes amid rising uncertainty, according to Reuters.
The development has already had an impact on global energy markets. Crude oil prices have climbed above $100 a barrel following the escalation, reflecting concerns over potential supply risks in a region that accounts for a significant share of global energy flows.
The Strait of Hormuz is one of the world’s most critical energy chokepoints, handling roughly a fifth of global oil trade, according to The Guardian. Any disruption to traffic through the narrow passage can have an outsized impact on global prices and supply chains.
While the US has said the proposed blockade is targeted at Iranian-linked shipping, even limited disruption in Hormuz can have wider effects on global energy flows due to the volume of oil and gas that passes through the route, The Guardian reported.
For India, the more immediate sensitivity lies in LPG supply.
India imports roughly 60% of its liquefied petroleum gas requirements, with a large majority of these shipments originating from the Gulf and transiting through the Strait of Hormuz, according to government data.
In recent weeks, LPG supply has tightened for commercial users such as restaurants and small businesses, as supplies have been prioritised for households. However, many households have also reported delays in domestic cylinder deliveries.
On crude oil, India’s diversified sourcing reduces the risk of an immediate supply shortage. However, a significant share of its imports remains linked to flows through the Gulf, making global prices highly sensitive to disruptions in Hormuz.
On a broader level, the rise in global oil prices has implications for the country’s import bill, currency and inflation trajectory.
Market participants and policymakers are watching developments closely, particularly for any changes in shipping patterns or escalation in the region that could affect flows through the strait.
Any escalation in the region could further complicate shipping through the strait, where overlapping military presence and strategic sensitivities have historically made the route volatile, according to The Guardian.
The immediate risk for India is not access to Iranian oil, but the stability of a critical route through which a large share of its energy imports flows.
For now, tanker traffic continues and supplies remain stable. But with tensions elevated and a US blockade set to begin, the situation remains fluid, with potential implications for global energy markets and India’s import-dependent economy.