Hormuz Strait possible closure: Can India avoid a fuel crisis?

Union Minister for Petroleum and Natural Gas Hardeep Singh Puri on Sunday assured the public that India had adequate oil supplies to meet its needs, amid fears of Iran closing the Hormuz Strait as the Middle East boils in an explosive tenth day of the Israel-Iran conflict.

He explained that India had diversified its supply chain routes years ago, as a result of which “a large volume of our supplies do not come through the Strait of Hormuz now”. 

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In  figures, he explained that roughly 4 million barrels per day (bpd) out of India's requirement of 5.5 million bpd came from other routes. Only 1.5-2 million bpd (about 27 per cent) were from the Hormuz Strait.  

This strategic oil chokepoint (narrow channel) that also sees one of the highest daily transit volumes (according to a 2023 US Energy Information Administration analysis) makes it highly susceptible to majorly disrupting global oil and gas trade, if it were to be closed. Iran's parliament has already voted for its closure, with the final decision resting on the country's supreme national security council, a Reuters report said. 

Yet, the Union minister has emphasised that the nation's oil marketing companies were also stocked with several weeks' worth of supplies, with more coming in from the alternate routes. 

However, Puri did not reveal whether they would all remain viable ways for India to import oil—without fuel prices increasing—if the Hormuz Strait were to be shut down for longer than the supplies would last. 

While the Union minister has assured that steps would be taken to combat a rise in fuel prices, the fact remains that India is one of the world's largest importers of oil and natural gas, buying over 85 per cent of its crude oil needs and roughly half of its natural gas needs—and that over 40 per cent of these oil imports and half of these gas imports come from the Middle East, as per a PTI report.

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According to global trade analytics firm Kpler, India is projected to import as many as 2-2.2 million barrels of Russian oil per day: the highest figure in the last two years, which exceeds the amount of oil imported from Iraq, Saudi Arabia, the UAE and Kuwait combined. 

According to PTI, Qatar (another important supplier of gas) does not use the Hormuz Strait, nor does Australia, Russia, Brazil and the US.

“India's energy strategy is shaped by successfully navigating the trilemma of energy availability, affordability and sustainability,” Puri had said in an X post last week.