The recent conflict around the Strait of Hormuz—one of the world’s busiest oil shipping routes—triggered fears of supply disruptions and briefly pushed crude oil prices sharply higher. Although Brent crude has since fallen below $74 a barrel and shipping conditions are improving, the risks facing global energy markets have not disappeared.
Petroleum Minister Hardeep Puri and Chief Economic Adviser Anantha Nageswaran have argued that India weathered the crisis better than many countries, helped by quick government intervention, resilient domestic infrastructure and prudent fiscal management. Experts who spoke to CNBC-TV18 agree that those measures cushioned the immediate impact, but they also believe the crisis marks the beginning of a more volatile era for global energy security.
Why the danger isn’t over
Although the immediate military confrontation has eased, experts caution that the geopolitical environment remains fragile.
Former Ambassador to the UAE Navdeep Suri believes the ceasefire between Iran and US should not be mistaken for lasting stability.
“I think the ceasefire is still pretty fragile.”
He argues that another disruption around the Strait of Hormuz could quickly reignite concerns over global oil supplies.
Even if shipping continues to normalise, another challenge remains. Strategic petroleum reserves and commercial inventories across many consuming countries were drawn down during the conflict, and rebuilding those stockpiles could continue to support crude prices.
“The world is still a billion barrels short of where it would have been if the war hadn’t taken place.”
In other words, oil prices could remain structurally higher than before the conflict even if physical supplies return to normal.
How India protected domestic fuel supplies
India’s biggest advantage during the crisis was its ability to rapidly increase domestic LPG production.
According to former Joint Secretary at the Ministry of Petroleum and Natural Gas Vivek Kumar, years of investment in refining capacity, import infrastructure and storage gave policymakers the flexibility to respond quickly once the crisis unfolded.
Just eight days after the conflict began, the government issued the LPG Control Order, directing refineries to alter their production mix and prioritise LPG over other petroleum products.
The results were immediate. Domestic LPG production increased from around 35,000 metric tonnes a day to nearly 54,000 metric tonnes a day within eight days, significantly reducing dependence on imported butane and propane.
The government also capped cooking gas refills, introduced digital authentication to curb black marketing, reduced excise duty by ₹10 per litre and absorbed part of the LPG subsidy burden to protect consumers.
Another important element of the response was securing alternative supplies before shortages emerged. Authorities quietly diverted 12 LPG vessels away from the Strait of Hormuz without paying transit fees while simultaneously sourcing supplies from countries including Algeria, Japan and Canada.
According to Kumar, India also maintained petroleum inventories equivalent to roughly two months of national consumption across crude oil, LNG and refined products, providing an important cushion against supply disruptions.
Why fuel prices didn’t spike
Despite HPCL briefly climbing to around $126 a barrel during the crisis, retail fuel prices in India remained largely stable.
Unlike many countries, retail fuel prices in India do not move automatically with global crude prices. State-owned oil marketing companies (OMCs) and the government can temporarily absorb part of the increase through lower taxes and higher subsidies, cushioning consumers from sudden price shocks.
That approach was used extensively during the latest crisis. The government reduced taxes and expanded LPG subsidies, while OMCs absorbed substantial under-recoveries on fuel sales.
Former HPCL Chairman and Managing Director MK Surana believes government-owned OMCs, which account for around 90% of India’s fuel marketing, remain one of the country’s strongest financial buffers during periods of extreme volatility. However, he cautions that repeatedly expecting companies to absorb losses is not sustainable.
Instead, he argues that India should build financial reserves during periods of lower oil prices so they can be deployed when global markets become volatile.
He also believes consumers may not immediately benefit from lower crude prices. Global inventories remain below pre-conflict levels, countries are expected to rebuild strategic reserves and oil companies will first need to recover losses incurred during the crisis before significant reductions in retail fuel prices become feasible.
Diversifying beyond the Strait of Hormuz
The crisis has also accelerated India’s efforts to reduce its dependence on one of the world’s most vulnerable energy chokepoints.
Before the conflict, nearly half of India’s crude oil imports passed through the Strait of Hormuz. Kumar says that dependence has already begun to decline as Indian refiners expanded purchases from Latin America, West Africa and the Americas.
Countries such as Brazil, Colombia, Argentina, Nigeria, Ghana and Ivory Coast are becoming increasingly important suppliers alongside traditional Middle Eastern producers.
Suri believes diversification is only one part of a broader energy security strategy.
India has demonstrated considerable flexibility in recent years, increasing purchases from Russia after Western sanctions and expanding imports from the United States whenever commercial conditions became favourable.
At the same time, he cautions against assuming the Gulf can simply be replaced.
“The fact is that Gulf oil is the closest to us, the most accessible to us, and the most competitive for us.”
Rather than moving away from the region, India is also strengthening partnerships with Gulf producers that can bypass the Strait of Hormuz. The UAE and Saudi Arabia are expanding export capacity through pipelines terminating at Fujairah on the UAE’s east coast and Yanbu on Saudi Arabia’s Red Sea coast.
The UAE has also signed a long-term LPG supply agreement with Indian Oil and is working with India to expand strategic petroleum reserves.
A playbook that may be tested again
Chief Economic Adviser Anantha Nageswaran has said the government followed a strategy similar to the one used during the COVID-19 pandemic, relying on targeted interventions instead of broad-based market distortions.
He expects the current account deficit to widen only marginally this financial year and believes inflows from NRI dollar deposits could provide additional support for India’s external balance.
Taken together, the government’s actions—from rapidly increasing LPG production and securing alternative supplies to cushioning consumers and diversifying crude imports—helped India navigate one of the biggest energy disruptions in recent years.
The broader lesson, however, extends well beyond this crisis.
As geopolitical conflicts, shipping disruptions and strategic competition become increasingly frequent, energy security is no longer just about securing enough oil. It is about building resilience before the next disruption arrives.
That means investing in domestic infrastructure, expanding strategic petroleum reserves, diversifying import sources, strengthening diplomatic partnerships and creating financial buffers that can absorb future shocks. The Gulf oil crisis demonstrated that these measures can help soften the impact of a disruption—but they will also determine how well India responds when the next one inevitably arrives.
