The escalating conflict between Iran and the US, which is now spreading across West Asia, is fuelling fears of a blockade of the world’s most critical energy choke point — the Strait of Hormuz — threatening around 2.6 million barrels per day (mb/d) of India’s crude oil imports.
ICRA points out that roughly 50 per cent of India’s crude oil and 54 per cent of liquefied natural gas (LNG) imports were routed through the Strait of Hormuz in FY25.
Global real time data and analytics provider Kpler said: “A disruption at the Strait of Hormuz would have immediate and significant implications for both India and global oil markets, as roughly 2.6 mb/d 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, it added.
Refiners and trade sources said oil tankers are not entering the Straits of Hormuz currently fearing strikes. As tensions are escalating, more supplies might get re-routed, which would mean more war premium and a higher bill.
Sumit Ritolia, Kpler’s Lead Research Analyst for Refining & Modeling told businessline: “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. However, a prolonged full blockade remains a low-probability scenario given the economic dependence of Gulf producers, including Iran, on uninterrupted export revenues.”
Rising volatility is pushing up crude oil prices, which does not bode well for India’s energy import bill, especially at a time when the rupee is at its weakest against the US dollar.
Prashant Vasisht, Senior VP and Co-Group Head, Corporate Ratings at ICRA, said over the past few days, crude oil prices have risen from around $65 a barrel to $72-73 currently owing to the build-up of geo-political tensions in the region.
“For Indian refiners, crude oil could be sourced from alternate locations such as the US, Africa, South America, however elevated energy prices could lead to a soaring import bill. Additionally, elevated crude oil prices would moderate the marketing margins and profitability of oil marketing companies,” he warned.
Additionally, any attack on oil and gas production facilities of other major West Asian producers would further aggravate the situation, Vasisht added.
On alternate sources for India, Ritolia said diversification options include increased sourcing from Russia (via eastern routes or via the oil on water around India), the US, West Africa (Nigeria, Angola), and Latin America (Brazil, Colombia, Venezuela).
Published on February 28, 2026
