Israel launches attack on Iran; Warns citizens to move to protected areas

Escalating conflict in the Gulf region could trigger a sharp spike in crude oil prices and severely disrupt global supply chains. The biggest concern is the Strait of Hormuz - the world’s most critical oil transit route. A significant share of global crude exports passes through this narrow waterway, which connects major Gulf producers to international markets.

If Iran were to restrict or close the route, global oil supplies could tighten dramatically, sending prices soaring. Higher crude prices would likely push up petrol and diesel rates in India, adding pressure on inflation and increasing costs across sectors such as transport, manufacturing and logistics.

How Dependent Is India on Oil Imports?

India imports nearly 85–90% of its crude oil requirements, making it highly vulnerable to global price shocks. Recent data cited by The Print, based on tracking firm Kpler, suggests that around 50% of India’s oil imports are linked to shipments moving through the Strait of Hormuz. As of late February this year, India was importing roughly 2.6 million barrels per day from Gulf nations — underlining its strong reliance on the region.

Why Is the Strait of Hormuz So Crucial?

The Strait is considered the most sensitive energy chokepoint in the world. Roughly one-fifth of global crude oil consumption passes through it. Oil from producers such as Saudi Arabia, Iraq, United Arab Emirates, Kuwait and Qatar flows through this corridor to major Asian buyers including India, China, Japan and South Korea.

According to the US-based Energy Information Administration (EIA), a large share of globally traded crude and liquefied natural gas moves through this route. Any disruption could reduce supply, raise freight and insurance costs, and sharply increase import bills for energy-dependent economies.

How Would India Be Affected?

A blockage or military escalation in the Strait could:

• Push global crude prices higher

• Increase India’s oil import bill

• Weaken the rupee due to higher dollar demand

• Raise petrol and diesel prices

• Fuel broader inflation across the economy

Given India’s heavy reliance on imported crude, even a temporary disruption could strain government finances and household budgets.

India’s Diversified Oil Basket

To reduce risk, India has diversified its crude sourcing in recent years. Apart from Gulf suppliers, it now imports oil from Russia, the United States, West Africa, South and Central America, Mexico, Europe, North Africa, Canada and other Asia-Pacific producers.

However, despite diversification, the Strait of Hormuz remains a vital artery for global energy flows. Any instability in the region could have far-reaching consequences for India and the wider world economy.