New Delhi, March 3 India possesses approximately 100 million barrels of commercial crude oil reserves – stored in tanks, underground reserves, and on ships en route – which could cover roughly 40-45 days of its needs if flows through the Strait of Hormuz are disrupted, according to Kpler.
India imports about 88% of its crude oil needs – the raw material for fuels like petrol and diesel – with over 50% supplied by Middle Eastern countries and transiting the narrow Strait of Hormuz, whose flows have been disrupted amid the Iran crisis.
If crude supply from the Middle East were to completely halt for a temporary period, the immediate impact would be logistical and price-related, with supply risks intensifying if movement through the Strait of Hormuz is disrupted for longer, said Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler.
A closure of the Strait of Hormuz would initially affect prompt cargo deliveries. "However, refiners typically maintain commercial inventories, and cargoes already at sea would continue to arrive, providing some short-term cushioning to the system," he added, noting that in the event of a prolonged disruption, medium-term pressures would arise due to higher import costs, freight expenses, and the need to reroute supplies over longer distances.
"The country maintains strategic petroleum reserves alongside commercial inventories held by refiners and oil marketing companies. These reserves are intended to manage temporary supply shocks rather than sustained outages," he said. "Based on Kpler inventory data, commercial crude stocks are around 100 million barrels, including volumes in the strategic petroleum reserve (SPR) facilities at Mangalore, Padur, and Visakhapatnam."
With imports via the Strait of Hormuz averaging roughly 2.5 million barrels per day – about half of India's total crude imports of just over 5 million barrels per day – these combined reserves could theoretically cover around 40-45 days of imports in a crude disruption scenario, he said.
Additional refined product inventories would further extend the effective coverage.
However, the immediate impact will be on prices. Brent, the global benchmark, crossed USD 80 per barrel, roughly 10% higher since the Iran crisis. For India, higher prices translate to higher import costs.
India spent USD 137 billion on crude oil imports in the fiscal year ending March 31, 2025. During April 2025 to January 2026 – the first ten months of the current fiscal year – it spent USD 100.4 billion on importing 206.3 million tonnes of crude oil.
The United States and Israel launched military strikes on targets in Iran over the weekend. Tehran retaliated with missiles and drones targeting Israel and countries hosting US forces, including the United Arab Emirates, Qatar, Kuwait, Bahrain, Iraq, Jordan, and Saudi Arabia.
Media reports suggest that the conflict has effectively closed the Strait of Hormuz, a key conduit for global energy flows. Roughly one-third of the world's seaborne crude oil exports and about 20% of liquefied natural gas shipments transit this narrow waterway.
India, the world's third-largest oil importer, imports roughly half of its crude needs through this narrow strait. Its primary liquefied natural gas (LNG) supplier in Qatar also uses the strait to ship the fuel to India.
In the event of closure, India can source from suppliers in West Africa, Latin America, and the US to compensate for the shortfall from the Middle East. India could also source Russian oil to cover the deficit.
India had agreed to wind down purchases of Russian oil as part of a trade deal with the US – a deal which now faces uncertainty after the US Supreme Court struck down US President Donald Trump's country-based tariffs.
"Russian cargoes currently floating in the Arabian Sea and the wider Asian region without firm buyers could also be absorbed relatively quickly if needed," Ritolia said.
If the Strait of Hormuz – the 33-kilometre passage connecting the Persian Gulf to the Arabian Sea – were disrupted or shipping were forced onto longer routes, India's crude import bill would increase.
Even without a complete blockade, higher freight costs, war-risk insurance, and geopolitical premiums would drive up landed costs.
"In a more severe scenario, policy intervention would likely become a key stabilising tool. The government could prioritize domestic energy security by asking refiners to moderate or temporarily curb refined product exports to ensure adequate domestic supply," he said.
Given that India is among the world's largest exporters of refined products, particularly diesel and jet fuel, redirecting export volumes to the domestic market would provide an additional buffer.
India exported 23.7 million tonnes (474,000 bpd) of petroleum products, or 10% of the country's fuel consumption, in 2024-25. During April-January, exports stood at 53.3 million tones.
"If the Hormuz situation were to deteriorate significantly, safeguarding domestic fuel availability and price stability would likely take precedence over export optimisation, reinforcing internal supply resilience even at the cost of lower export revenues," he said.
The worst-case scenario would involve a prolonged and severe disruption to Hormuz flows combined with sustained geopolitical escalation. In that case, crude prices would spike sharply, freight markets would tighten, and refiners could eventually be forced to curtail operations if replacement barrels are delayed.
"However, such a scenario would have major global economic consequences, making it a low-probability but high-impact risk," he added, noting that the near-term risk is primarily price volatility and higher import costs rather than immediate physical shortages.
India has diversification options and inventory buffers, but sustained disruption would materially increase import costs and create macroeconomic pressures.
