NEW DELHI: India needs to diversify its crude oil import routes, build larger strategic reserves and reduce its dependence on imports from the Gulf region to better handle future supply disruptions, according to a report by S&P Global.
The report noted that India's energy security was tested during the recent tensions in the Middle East, which raised concerns over shipping through the Strait of Hormuz—a key route for global oil and gas supplies.
According to S&P Global, India has managed the immediate situation well, but a prolonged disruption could create challenges, particularly in ensuring adequate crude oil and LPG supplies through the end of the year.
The report said India should focus on developing alternative sources of crude oil imports, increasing storage and inventory buffers, and reducing import-linked vulnerabilities. It also highlighted concerns over LPG supplies, where India's dependence on Gulf producers remains significant.
The timing of the disruption could provide some relief, as the ongoing monsoon season typically lowers fuel demand and reduces pressure on inventories. However, the report cautioned that India must prepare for a seasonal rise in energy consumption during the festive period in the fourth quarter.
Even if shipping through the Strait of Hormuz returns to normal, global crude supply chains could take time to fully stabilize, the report said.
According to the report, the Hormuz disruption has affected an estimated 15 million barrels per day (bpd) of global oil flows, including crude oil and refined products, although a smaller portion of pre-conflict supplies continues to move.
For Indian refiners, this translates into the loss of around 20% of pre-conflict Middle East crude supplies, forcing them to seek alternative sources.
Russian crude remains India's largest source of imports, while supplies from Venezuela have been rising. Imports of US crude rebounded to around 250,000 bpd in May from about 98,000 bpd in April. However, competition for supplies remains intense, particularly from buyers in OECD Asia. Other potential suppliers, including Brazil, Nigeria, Angola and Colombia, are also facing strong demand from Asian markets.
As a result, refinery operations have remained under pressure. India processed around 5.23 million bpd of crude oil in April 2026, down 0.5% from a year earlier and 5.8% lower than in March.
Meanwhile, oil prices fell sharply on Thursday, declining more than 1% to their lowest level since the start of the Iran conflict. The drop followed reports of a temporary agreement between the United States and Iran aimed at ending hostilities, reopening the Strait of Hormuz and easing sanctions on Tehran.
Brent crude futures were trading at $78.15 a barrel, while US WTI crude was at $74.56 a barrel.
Government sources indicated that authorities have begun reviewing some of the measures introduced during the conflict period, including fuel price adjustments and LPG supply restrictions. The government has also stepped up domestic LPG production while reducing supplies to certain commercial consumers to ensure adequate availability for