Threat of supply disruptions rising but India has enough stock: Officials

India has enough crude reserves and is boosting imports from other sources even as the Strait of Hormuz faces risk of disruption due to the escalating Iran-Israel conflict

Iranian Parliament’s move to block the crucial Strait of Hormuz threatens to disrupt crude oil and gas supplies from the Persian Gulf, but India has sufficient inventories and is preparing to increase purchases from alternative sources, officials said. The government is monitoring the situation closely, they added.

 

In an unprecedented step, Iran’s Parliament voted on Sunday, allowing emergency measures to block the narrow, strategic waterway, state media reported. However, the final decision rests with the country’s Supreme National Security Council.

 

“The situation is highly fluid,” said a senior official at the Ministry of Petroleum. “The impact of the war on energy infrastructure and logistics is not immediately clear. While ships are still moving through the strait, oil prices are now realistically expected to stay elevated for a much longer period. We are monitoring the situation.”

 

Another official said that global supply continues to outpace demand, and Indian refiners currently have adequate stocks. “The oil minister has been taking daily meetings on the subject. Our importers will soon be ramping up volumes from other sources,” the official added.

 

Prime Minister Narendra Modi spoke with Iranian President Masoud Pezeshkian, hours after the United States’ aerial strikes targeted three nuclear sites in that country. “We discussed in detail the current situation. Expressed deep concern at the recent escalations. Reiterated our call for immediate de-escalation, dialogue and diplomacy as the way forward and for early restoration of regional peace, security and stability,” Modi posted on X.

 

Iran has maintained that it does not seek to escalate conflict, but will respond to aggression from Israel and the United States. The Iranian foreign ministry has called on the United Nations to intervene and restrain Washington.

 

India’s crude imports are not directly affected by the crisis, as the country has not imported oil from Iran in recent years due to sanctions on the Islamic regime and payment challenges. However, more than half of India’s total crude and natural gas imports pass through the Strait of Hormuz. A potential blockade could disrupt energy flows from key West Asian suppliers, officials warned.

 

India sources significant volumes from Iraq, Saudi Arabia, and the United Arab Emirates -- its second, third, and fourth-largest crude suppliers after Russia. In FY25, India imported $27.35 billion worth of crude from Iraq, $20.09 billion from Saudi Arabia, and $13.86 billion from the UAE, according to government data. 

 

Unprecedented move

 

Though Iran has never blocked the strait, it has threatened to do so on multiple occasions. In 1986, Iran mined the waterway, damaging the USS Samuel B Roberts, an American naval frigate. Should Tehran act on its current threat, Washington is expected to respond swiftly, oil analysts said.

 

Iran’s own economic interests are also at stake. The country has been accelerating crude exports in recent weeks, fearing attacks on key oil infrastructure. Bloomberg reported that Iran has shipped an average of 2.33 million barrels per day (bpd) since June 13. Large volumes have been transported to Kharg island, Iran’s primary oil terminal in the northern Persian Gulf.

 

Despite international sanctions, China remains Iran’s largest oil customer, accounting for 80–90 per cent of exports. In 2024 and early 2025, Iran’s crude exports averaged between 1.38 million and 1.7 million bpd. In March 2025, exports reportedly surged to 1.71–1.8 million bpd, amid fears of tighter American sanctions, according to global energy trackers. 

 

Difficulties in navigation

 

Tankers continued to move through the Strait of Hormuz on Sunday, according to maritime tracking data from the Automatic Identification System (AIS). However, markets are pricing in geopolitical risk, not just operational continuity, said oil trading platform Alpe in a statement. “Even uninterrupted transit in Hormuz may carry elevated insurance premiums and hedging activity purely based on headline velocity,” it said. 

 

Meanwhile, nearly 1,000 ships in the Gulf have encountered “persistent and sometimes severe” GPS disruptions each day over the past week, according to the French naval monitoring group MICA Center. “This makes it harder to navigate safely at night, in poor visibility, and/or when traffic density is heavy,” it said in a post on X.

 

Last week, the oil tanker Front Eagle, operated by Frontline -- one of the world’s largest listed tanker firms -- collided with another vessel, Adalynn, off the UAE coast. 

Petroleum and Natural Gas Minister Hardeep Singh Puri sought to downplay the latest developments. "We have been closely monitoring the evolving geopolitical situation in the Middle East since the past two weeks. We have diversified our supplies in the past few years and a large volume of our supplies do not come through the Strait of Hormuz now," Puri said.

 

Oil Marketing Companies have supplies of several weeks and continue to receive energy supplies from several routes, he said. "We will take all necessary steps to ensure stability of supplies of fuel to our citizens," he added.