(India, 15th) — Following military strikes by the United States and Israel against Iran, continued shipping disruptions at the Strait of Hormuz have caused international crude oil and natural gas prices to rise sharply. Against this backdrop, India's economy, which is highly dependent on energy imports, has revealed vulnerabilities on multiple fronts, with its energy supply, inflation, and growth prospects all facing severe pressure.
A large portion of India's imported energy comes from the Middle East. To address the severe pressure on oil and gas supply caused by disruptions to shipping at the Strait of Hormuz, the Indian government began implementing energy allocation measures this week. Based on users’ average gas consumption over the past six months and the actual supply capacity, the government is prioritizing liquefied natural gas supply by different categories. Among these, household gas, transportation fuels, and liquefied petroleum gas production are to receive 100% guaranteed supply, while industrial, manufacturing, and commercial users will maintain 80% of their gas supply, and fertilizer plants will maintain 70% supply.
According to Xinhua News Agency citing a recent report by Indian financial services firm Emkay Wealth Management, if the US-Israel-Iran conflict lasts for a month or longer, global liquefied natural gas production in 2026 could drop by around 11.2 million tons, with tight energy supply dragging down India’s economic growth. The report points out that the conflict could also cause the Indian Rupee to depreciate, increase import costs, and further exacerbate inflation risks.
Although the US government has relaxed restrictions on India’s purchase of Russian crude oil, this is just a “drop in the bucket.” Research by Japanese securities firm Nomura shows India could obtain 20 million to 30 million barrels of crude oil from Russia as a result—only about four days' worth of India’s crude oil consumption, which is far from enough to solve the urgent market pressures.
Although the US government has relaxed restrictions on India’s purchase of Russian crude oil, this is just a “drop in the bucket.” Research by Japanese securities firm Nomura shows India could obtain 20 million to 30 million barrels of crude oil from Russia as a result—only about four days' worth of India’s crude oil consumption, which is far from enough to solve the urgent market pressures.
In addition, India’s logistics and trade have also been hit. “Because the Gulf region is at the center of India’s global logistics network, this disruption has had an immediate and severe impact,” said Jitendra Srivastava, CEO of Mumbai-based Triton Logistics and Marine Services. Approximately US$48 billion (nearly RM225.6 billion) of India’s non-oil exports each year are directly linked to the Persian Gulf market and depend on shipping through the Strait of Hormuz. As a large part of international cargo transport relies on transshipment hubs in the Gulf, flight cancellations or rerouting have exposed exporters to the risk of longer dwell times and higher warehousing costs.
Hasnain Malik, Head of Geopolitical Risk at the UK’s Tellimer Company, believes that India has virtually no ability to withstand the supply chain disruptions caused by shipping blockages at the Strait of Hormuz.
Hasnain Malik, Head of Geopolitical Risk at the UK’s Tellimer Company, believes that India has virtually no ability to withstand the supply chain disruptions caused by shipping blockages at the Strait of Hormuz.