The war involving Iran, Israel, and the United States has rattled global oil markets. After air strikes on Iran that reportedly killed its Supreme Leader, Ayatollah Ali Khamenei and other senior officials, fears have grown that the Strait of Hormuz, a narrow but extremely important sea route, could be blocked or disrupted. This short waterway between Iran and Oman is crucial because about 20-30% of the world’s crude oil and liquified natural gas travels through it every day.
Oil prices surged sharply in early March 2026, with Brent crude, the global price benchmark, climbing toward around $80 per barrel amid fears of supply disruption. Some analysts even warn prices could head toward $100 a barrel if the conflict persists and key shipping lanes remain threatened.
India is one of the world’s largest oil importers, relying on foreign crude for nearly 90% of its needs. Much of this oil is shipped from the Middle East, and a large share of that travels through the Strait of Hormuz.
If the Strait were to remain closed or face ongoing disruption:
- Global oil prices could spike further due to supply shortages or risk premiums.
- Freight and insurance costs for tankers would rise, making imports more expensive.
- India’s fuel import bill could grow significantly, adding pressure on the economy.
This rise in crude costs would likely be passed on slowly to consumers through higher petrol and diesel prices, and could also add to inflation pressures within the Indian economy.
Does India Have Any Buffer?
The good news is that India is not completely exposed. The country keeps strategic petroleum reserves that can cover several weeks of imports, and refineries have stocks to meet short-term needs.
Officials and experts also say India could diversify its oil sources, buying more from other countries like Russia, the US, West Africa, or Latin America, if Middle Eastern supplies are hit.
Still, these alternatives are not as cheap or as quick as Gulf oil, so price volatility and higher fuel costs remain a real risk if the conflict continues for a long time.
A prolonged war involving Iran and disruption in the Strait of Hormuz would likely push up global oil prices. India, heavily dependent on imported crude, could see higher costs and inflation pressures as a result, even if its immediate oil supply stays stable for a few weeks thanks to existing reserves and backup plans.
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