“Oil Shock Ahead?” Modi Urges Iran to Keep Shipping Lanes Open as India Faces Energy Crisis Fears

Prime Minister Narendra Modi held a crucial conversation with Iranian President Masoud Pezeshkian, raising concerns over global energy disruptions caused by the ongoing US-Iran conflict.

During the call, Modi stressed the urgent need to keep key maritime routes open, especially as tensions threaten global oil and gas supplies. He also condemned attacks on critical infrastructure and highlighted the importance of stability in West Asia.

Strait of Hormuz Crisis Raises Alarm

At the centre of the concern is the Strait of Hormuz, a crucial route through which nearly 27% of the world’s oil supply passes daily.

With Iran effectively restricting movement in the region, India—one of the world’s largest oil importers—faces the risk of serious supply disruptions. A major portion of global oil flowing through this route is destined for Asian countries, including India.

Oil Prices Surge, US Offers Temporary Relief

The crisis has already pushed global oil prices sharply higher, jumping from around $63–70 per barrel to nearly $114.

In response, the United States has offered a temporary 30-day waiver allowing Indian refiners to continue purchasing Russian oil. US Treasury Secretary Scott Bessent also suggested flexibility in sourcing crude, though experts in India have downplayed these remarks.

Energy expert Narendra Taneja said India will continue to buy oil from wherever it is available, stressing that national energy security remains the top priority.

India Looks for Alternative Suppliers

To manage the crisis, India has increased oil imports from Russia and significantly boosted purchases from the United States.

Imports of US crude have risen sharply, reflecting a clear strategy to diversify supply sources and reduce dependence on the Middle East. The government is also exploring energy deals with countries like Norway, Canada, and Algeria.

LPG Supply Emerges as Bigger Concern

While oil supply remains manageable for now, a bigger challenge lies in liquefied petroleum gas (LPG).

India depends on Qatar for nearly 40% of its LPG needs, and any prolonged disruption could hit household consumption directly. Unlike oil, LPG is difficult to store due to its volatile nature, making long-term reserves impractical.

How Prepared Is India?

Experts estimate that India has around 40 days of usable oil reserves when combining strategic and refinery storage.

However, rising demand is adding pressure. LPG consumption has surged significantly in recent years, and a large portion of this demand is met through imports, increasing vulnerability during global disruptions.

Impact on Economy and Daily Life

The rising energy costs are already affecting sectors across India.

Higher fuel prices could increase transportation and production costs, while LPG price hikes may hit households and businesses. Reports suggest industries like hospitality and textiles are beginning to feel the pressure, with fears of job losses and shutdowns if the crisis continues.

Long-Term Shift in Energy Strategy

The current crisis has underlined the need for India to reduce dependence on a single region for energy supplies.

The government has already taken steps by signing long-term LPG import deals with the US and exploring partnerships with multiple countries. However, these alternatives come with higher logistics costs, which could eventually impact consumers.