Archive · 20 Jul 2026
Hormuz Crisis Highlights India's Energy Vulnerabilities
India faced a big problem when the Strait of Hormuz, a key route for oil ships, was closed due to a war.
This made oil prices go up, but India was better prepared this time compared to a similar crisis in 1991.
The government took steps to control fuel prices and increase domestic production of oil and gas.
However, these steps cost a lot of money.
Experts say India needs to do more to reduce its dependence on imported oil and build more storage for oil and gas.
They also suggest working with neighboring countries to ensure fuel security.
The crisis shows that even though countries are trying to use cleaner energy, oil will still be important for many years.
India's heavy dependence on imported oil (90%) makes it vulnerable to supply disruptions.
Strategic reserve releases and alternative export routes helped prevent a prolonged surge in global crude prices.
Government interventions boosted domestic LPG production and controlled fuel prices but imposed financial costs on oil companies.
Expanding domestic oil and gas production, increasing strategic reserves, and improving storage infrastructure are critical long-term energy priorities.
Regional fuel security initiatives and reforms to attract global energy investments can strengthen India's resilience against future supply disruptions.
- Who
- India, Iran, US, China, Saudi Arabia, UAE
- What
- Disruption in oil supply due to the closure of the Strait of Hormuz
- When
- Earlier this year (specific date not mentioned)
- Where
- Strait of Hormuz, Gulf region, India
- Why
- Conflict in the Gulf region led to the closure of the Strait of Hormuz, disrupting oil supply and causing price fluctuations.
Proactive Energy Security Measures
Cost of Government Interventions
Energy Security
Proactive Energy Security Measures
Expanding domestic oil and gas production, increasing strategic reserves, and improving storage infrastructure are critical long-term energy priorities.
Cost of Government Interventions
Government interventions to control fuel prices have imposed substantial financial costs on oil companies and the exchequer.
- Oil Import Dependence
- 90% (up from less than 50% in 1990)
- Strategic Reserve Release
- 400 million barrels
- LPG Production Increase
- From 35,000 to 54,000 tonnes per day
- Oil Price Impact
- Reduced Chinese demand prevented a higher price spike
- Fiscal Deficit Impact
- Could rise by half a percentage point to 4.8% of GDP
- Strait of Hormuz Closure Impact
- Bottled up 15-20 million barrels per day (20% of globally traded oil)
- Alternative LPG Supplies
- US supplies could not cover the shortfall
- Ceasefire Impact
- Brought oil prices down