Crude oil prices are soaring again, back above the $80 per barrel level as fresh tensions between US and Iran makes shipping through the Strait of Hormuz fraught with risks. Vessel movements have slowed sharply again after fresh attacks on ships on Tuesday and subsequent US retaliatory strikes on Iranian targets overnight.Highlighting the growing uncertainty surrounding the ceasefire, US President Donald Trump, speaking at NATO’s annual summit in Ankara, described the ongoing peace negotiations as “a waste of time.”Trump on Wednesday warned that Washington was prepared to launch another round of strikes against Iran, only hours after declaring that the ceasefire had effectively collapsed following Iranian attacks.“We hit them very hard last night,” Trump said when asked whether military action would continue. “We’ll probably hit them hard again tonight.”Also Read | Hormuz oil shock sends India back to Russia: Is this a peak or the new normal?The latest exchange of hostilities has heightened concerns that the conflict with Iran could flare up once again. Those fears intensified after Trump stated that the interim arrangement to suspend fighting was “over,” although he added that negotiations would still be allowed to continue.Before the conflict, the Strait of Hormuz handled nearly 40% of India’s crude oil imports, around 60% of its LNG imports and approximately 90% of its LPG supplies, underlining the country’s heavy dependence on the strategic waterway.So what do the latest disruptions mean for India’s energy supplies?
What is means for India’s crude oil, LPG and LNG supplies
While India’s crude oil situation is relatively well diversified, it is LPG and LNG imports that will need to be watched.According to Sumit Ritolia, Lead analyst, Modelling and Refining at Kpler, crude flows through the Strait of Hormuz had not yet fully recovered before this latest escalation. “For India, however, it has largely been business as usual over the past 100 days, with refiners successfully managing supply through a diversified import portfolio,” he said. What has helped India is its diversified crude oil import basket that helps reduce dependency on any single supplier. Ritolia points out that:
- Russian crude remains the cornerstone of the country’s import basket.
- Supplies from Saudi Arabia and the UAE, delivered through alternative logistics infrastructure, provide an additional layer of energy security.
- Crude grades sourced from West Africa and Latin America continue to supplement refinery requirements.
“Cargoes that can safely transit the Strait of Hormuz are still expected to move, although freight rates and insurance costs could rise if tensions persist,” he adds. He believes that instead of crude oil, the focus is likely to be more on securing LPG and LNG supplies. India depends on the Middle East in a big way for these two fuels and alternative sources are either limited or far away like the US, entailing higher transit times and more freight costs.Also Read | Sharp rebound! India’s crude inventory hits almost 1-year high; strong oil imports help replenish stocks depleted during US-Iran war“Unlike crude, these markets (LPG & LNG) have fewer short-term substitution options and remain more exposed to Gulf supply and shipping disruptions. A prolonged period of instability could tighten availability, increase freight costs, and add pressure to regional prices again as we have seen over the last few months,” he says. But for now, India’s crude supply story remains one of diversification and resilience, not immediate scarcity. “The key variables to watch are how long regional tensions persist, the impact on shipping and insurance costs, and whether LPG and LNG markets begin to experience more meaningful disruptions,” he adds.Also Read | 145% rise in LPG imports: Gas buys to be doubled from US – how much can it help India cut reliance on Gulf supply?
India eyes safe Strait of Hormuz passage for its ships
India is exploring multiple options, including diplomatic engagement with Iran, to ensure the safe passage of at least nine fully loaded tankers currently waiting in the Persian Gulf.According to a Bloomberg report quoting sources, the government is closely tracking the movement of these vessels, which are carrying crude oil and LPG.
Importance of Strait of Hormuz
As part of its response, the Ministry of External Affairs is expected to engage with Iranian authorities regarding the safety of Indian seafarers operating in the region. Hundreds of Indian crew members have remained stranded for months following the effective closure of the Strait of Hormuz. The nine tankers awaiting transit alone have 198 Indian mariners on board.Despite the renewed tensions, some ships continued transiting the Strait on Wednesday. Six vessels, including those headed for India, attempted the passage only hours after Tuesday’s attacks. However, at least one India-flagged Very Large Crude Carrier (VLCC), Lila Vadinar, turned back after reaching the Musandam Peninsula at the entrance to the Strait, the Bloomberg report said.Also Read | India’s strategic gas storage: LNG buffer mandate for terminals in the works – what it means