The U.S.-Israel strikes in Iran that began on February 28, 2026, triggered rapid Iranian retaliation, including drone strikes on U.S. facilities and missile launches across Gulf states. This broader violent disruption in West Asia has raised concerns over global oil supply chains, particularly the Strait of Hormuz, which transits around 34 percent of the world’s crude oil (see Figure 1).

India is a highly oil-dependent state, making it vulnerable to global price shocks. Recent developments, including U.S. sanctions on Russian oil companies Rosneft and Lukoil, U.S. tariffs on countries trading with Iran, and the escalation of the crisis in the Strait of Hormuz, have revealed critical gaps in India’s oil security strategy.

This piece argues that the present Indian strategy, based on opportunistic diversification and utilization of limited strategic reserves, remains inadequate when confronting supply disruptions. It evaluates India’s options in the short, medium, and long terms, presenting the requirement for diversified and sustainable supply contracts, expanded reserves and capacity, refinery infrastructure modification, and implementation of an accelerated energy transition policy in the long-term.

India’s Dependency and the 2026 Shock

Indian crude imports from Russia began declining in late 2025, following U.S. sanctions on Rosneft and Lukoil and the threat of secondary sanctions on Indian companies trading with Russian partners. As a result, India diversified its imports and relied on its next biggest suppliers, primarily Iraq, Saudi Arabia, and the UAE, comprising around 40 percent of its oil imports in 2025.

The 2026 crisis in West Asia pushed global oil prices up to nearly $120 per barrel in March 2026 from the $70 per barrel average in February 2026 and induced overall price fluctuations. India, which imports 89 percent of its crude oil needs, is heavily impacted by these developments as around 2.5 to 2.7 million barrels per day (bpd), or 40 percent of its imports, transit through the Strait of Hormuz. Though Iran’s new supreme leader, Ayatollah Mojtaba Khamenei, stated that the strait would “remain essentially closed as a tool of pressure,” Iran opened the strait for India and other “friendly nations,” reducing the uncertainty in supply. The Indian government has also assured that as of March 26, 2026, “crude oil supplies for the next 60 days have already been tied up by Indian Oil companies.”

India’s Options

Faced with sudden disruptions to its oil imports, India has four options: return to purchasing Russian oil; diversify beyond the Strait of Hormuz; enhance domestic strategic reserves; and develop a long-term oil security strategy, including measures for energy transition.

Russian Oil Purchases

With the onset of the crisis in West Asia, the United States issued a thirty-day waiver to “allow” Indian refiners to purchase Russian oil stranded at sea. Roughly 145 million barrels of Russian crude were stranded, of which Indian refiners purchased 30 million barrels of Urals grade at premium prices. This purchase is likely to provide temporary relief to Indian domestic demand. It does not, however, offer long-term supply stability.

Rosneft and Lukoil jointly account for 49.2 percent of Russia’s total crude production. As an immediate measure, India is looking to procure oil from non-sanctioned Russian suppliers.

However, increased Western scrutiny remains a constraint. The United States, the EU, and the UK have sought to reduce Indian energy dependence on Russia to limit revenues that could fund the “Kremlin’s war machine.” India must therefore balance these pressures while maintaining stable purchases from Russia, which signal continued strategic relations between the two countries.

Structural Constraints to Diversification

India is primarily dependent on five countries for oil: Russia, Iraq, Saudi Arabia, the UAE, and the United States. These present distinct advantages such as discounted prices, short voyage durations, oil-grade suitability, and long-term supply contracts and investments. To ensure minimum disruption to its refinery operations, India’s strategic diversification must account for both geographic sourcing and crude grade compatibility.

Geographical diversification would require increased imports from Latin America, West Africa, and the United States. However, this would increase freight and import costs due to longer routes and delivery durations. Shipments from West Asia reach Asia in around seven to fourteen days, while deliveries from the United States generally take thirty to forty-five days. Oil-grade diversification would entail meeting the requirements of Indian refineries that are largely configured to process medium-to-heavy sour crude grades, the largest share of the country’s import basket (see Table 1). According to the International Energy Agency, medium and heavy crudes accounted for around 62 percent of India’s crude imports in 2023, reflecting refinery configurations designed to process such grades efficiently. Further, much of the medium-heavy crude imported through the Strait of Hormuz is utilized by Indian refiners to process and export diesel and jet fuel, making this an economically attractive option. Indian refineries will also require modifications or infrastructural changes to process light-grade oil without blending. Infrastructural investments will be critical to sustain this in the long-term.

Strategic Reserve Gap

Indian reserves hold around 4,000 crore liters (40 billion liters) of oil across underground caverns in Mangalore (at approximately 50 percent capacity), Padur (at approximately 82 percent capacity), and Visakhapatnam (at full capacity). Beyond commercial use, the strategic reserves are likely to sustain demand for eight weeks (in the event of complete supply disruption).

To understand India’s strategic capacity during disruption, it is relevant to note comparable capacities in other Asian countries that are also heavily dependent on the Strait of Hormuz, particularly China, Japan, and South Korea. These three countries hold the largest oil reserves in Asia (see Figure 2).

The director of energy and refining at Independent Commodity Intelligence Services, Ajay Parmar, stated, “Indian inventories are much lower [than China], and so [it] is much more vulnerable in this situation.” China holds an estimated 1.2 to 1.3 billion barrels of onshore crude oil (as of January 2026), built strategically over the past decade. Japan holds reserves owned in a combination of national, private, and producer-nation joint reserves categories.¹ South Korean reserves are managed by the Korea National Oil Corporation with combined national and private sector stocks. India holds limited strategic reserves in only nationally maintained underground rock caverns.

This discrepancy between India’s reserves and those in the aforementioned countries is due to large stocks and onshore and offshore storage capacities developed as part of long-term national energy strategies. Critically, India requires higher onshore and offshore storage capacities with increased private participation in addition to alternative methods for meeting domestic demand. Further, India is presently an associate member of the International Energy Agency and requested full membership in 2023 to have decision making rights in global energy discussions. For this, the IEA requires countries to hold reserves of 90 days “of the previous year’s net imports, to which the government has immediate access (even if it does not own them directly) and could be used to address disruptions to global oil supply.” Thereby, Indian reserve capacities necessitate expansion.

Long-Term Energy Security Strategy

India must implement a renewed energy security strategy to better address such geopolitical and economic disruptions. The Indian government has already taken significant steps to this end. Additionally, augmenting strategic reserves by 6 million metric tons would extend the buffer for Indian refineries by an additional ninety days. The government is also looking to enhance reserve facilities by expediting the completion of the commercial-cum-Strategic Petroleum Reserves (SPR) in Chandikhol, Odisha.

While these measures are critical, India lacks a distinct oil security strategy that will enable a gradual shift to renewable energy to meet domestic demand. Dedicated efforts must address several priorities—expanding reserves and SPR facilities, permitting private and foreign company participation in Indian reserves, and enabling long-term supply contracts to reduce price volatility. Further, it is crucial for India to accelerate its energy transition, with EV adoption, renewable power expansion, and biofuel blending. Building regional energy supply chains with cross-border grids in South Asia and strategic partnerships with Indo-Pacific countries will also be critical to meet demand during disruptions.

The 2026 Hormuz crisis has revealed the structural limitations of India’s oil security strategy. Although measures like the temporary return to Russian oil purchases or incremental diversification provide short-term support, they are insufficient to address the structural constraints shaping India’s energy dependency. A durable oil and energy security strategy must therefore evolve beyond reactive crisis management.

Acknowledgments

The author gratefully acknowledges Mugdha Satpute for her invaluable and generous research assistance.