Beginning India has put all of its backup energy plans into operation because tensions are escalating in West Asia. This shows that India is doing something even though oil prices are going up around the world. The Strait of Hormuz is a major oil supply route that has been blocked by the war, which is largely about new combat between Israel and Iran-backed rebels. Brent and other crude oil prices have risen to their highest levels in years, over $90 per barrel. This development puts India’s energy security at danger because the country gets around 85% of its crude oil from other countries, making it one of the major buyers in the world. Under the Petroleum Planning & Analysis Cell (PPAC) framework, Prime Minister Narendra Modi’s government has put emergency measures in place. Inflation is already a concern, and the economy needs the monsoon to keep going. This article goes into detail about what caused the problem, how India is responding strategically, and how it will effect the economy of India and the energy markets around the world.
The Reasons for the War in West Asia and the Problems in the Oil Market
Last month, the combat in West Asia got worse because of a string of strikes that were equal to each other. People are more worried of a broader war in the area because of Israeli bombings on Hezbollah strongholds in Lebanon and Iranian missile attacks on Israeli positions. The Strait of Hormuz, which sees some 21 million barrels of oil flow through it every day (20% of the world’s oil), is now more likely than ever to be blocked or attacked on shipping. According to OPEC+ figures, a long-term stoppage could limit world supply by 5 to 7 million barrels per day. This would make the market more tighter, which is already the case because demand has bounced up since the pandemic and there are sanctions on Russia.
Prices for oil all across the world have gone up and down swiftly. Brent oil, the global standard, went up 12% in just one week, the greatest weekly gain since 2022. The U.S. benchmark, West Texas Intermediate (WTI), likewise went up to $86 per barrel. If the fighting goes on all summer, Goldman Sachs analysts estimate prices might go up to $100. This would happen because of a perfect storm of geopolitical risk premiums and seasonal maintenance at refineries. This is bad news for India right away. The Indian basket of crude, which is a weighted average of imported oil, has gone up to roughly $85 from $70 just two months ago. This surge very away affects the pricing of gasoline and diesel at the pump. In big cities like Mumbai and Delhi, prices have gone up 5–7%, which makes people upset as they get ready for the holidays.
India is weak since it relies on a number of Middle Eastern suppliers. PPAC says that Saudi Arabia is responsible for 18% of imports, Iraq for 22%, and the UAE for 12%. Any rise in tensions with Iran, which controls a lot of the Hormuz waterway, is a direct threat. Things are quite delicate, as seen by the tanker strikes in 2019. Prices went risen 15% in one night, forcing India to use its strategic reserves.
Diversification of Imports: Getting supplies faster from places other than the Middle East, notably the U.S. (up 20% in February), Russia (who is already sending 1.5 million barrels per day of discounted Urals oil), and Guyana, which is becoming a bigger supplier thanks to its offshore boom.
The government will mix 20% ethanol into gasoline across the country. In states where fuel use is high, government offices will have staggered working hours to cut down on peak-hour fuel use.
Price Damping Measures: To protect families, the government has released 2 million tons of LPG from tax-free bonded storage and set a temporary cap on the price of LPG cylinders.
Oil Minister Hardeep Singh Puri said at a press conference that these steps are in keeping with the Atmanirbhar Bharat vision, which wants to cut India’s reliance on imports to 67% by 2030 through exploration in India. The ONGC and Oil India Ltd. have been directed to boost production from the Krishna-Godavari basin by 50,000 barrels per day in the next several months.
Experts’ perspectives make people more confident that India is ready. Deepak Mishra, who used to be the Director General of the PPAC, adds, “India’s multi-year stockpiling—now at 73 days of consumption including commercial stocks—positions it better than most net importers.””S&P Global Platts’ poll backs this up by showing that India’s resilience is better than China’s 60-day buffer in similar conditions.
Inflation, growth, and industry are all things that affect the economy.
In FY2025, India’s GDP grew by 7.2%, but now it is having trouble since oil prices are going up over the world. The Reserve Bank of India (RBI) has already said that there are risks to its target of keeping inflation between 4% and 4.5%. RBI models say that a $10 rise in the price of oil might raise the CPI by 0.3 to 0.4 percentage points. Diesel is responsible for 40% of oil demand and 70% of freight transportation. This will make logistics more expensive, which could lower industrial profits by 2–3%.
The most affected areas are:
Transportation and Logistics: Truckers say their costs have gone up by 8% to 10%, which has made freight rates go up. This might make food prices go up by 5% in cities.
IndiGo and Air India have to spend an extra $200 million for fuel every three months. They would undoubtedly raise tariffs for customers during the busy summer travel season to cover these costs.
MSMEs and Agriculture: Small farmers who rely on subsidized fuel for irrigation may have to pay 15% more for their supplies, which could impact the output of kharif crops.
When it comes to money, oil subsidies are getting more and bigger. This quarter, upstream businesses like ONGC could have to pay ₹50,000 crore more than they make, up from ₹30,000 crore last year. But there are some good things: cheap Russian oil has saved $5–7 billion a year, and paying for products in rupees with Moscow safeguards against dollar volatility.
India’s move to renewable energy has broader effects. The war reveals how crucial the National Green Hydrogen Mission is. The goal is to make 5 million tons of hydrogen by 2030 to replace natural gas that is brought in from other countries. Putting money into solar and wind power, which already has a capacity of 150 GW, is a way to protect your money in the long run. Next month, PM Modi will open 10 more GW.
The world as a whole and India’s diplomatic balancing act
India’s reaction isn’t unique; it’s part of a global competition. The U.S. has used up its 700 million barrel Strategic Petroleum Reserve, while Europe is speeding up its imports of LNG from Qatar. China, India’s primary competitor in oil auctions, has received spot cargoes at higher prices, which illustrates how competitive the market is.
When it comes to diplomacy, New Delhi is on a thin edge. It has asked the UN to safeguard the peace while keeping good relations with both Israel (a key security partner) and Iran (via the Chabahar port project). After External Affairs Minister S. Jaishankar’s recent trip to the Gulf, Saudi Crown Prince Mohammed bin Salman said he will keep the supplies coming. This avoided shortages from happening immediately away.
People who watch the market predict that OPEC+ will have an emergency meeting, which might lead to an increase in production of 500,000 barrels per day. But Saudi Arabia has 3 million barrels of extra capacity, which helps keep things calm and stops doomsday scenarios from happening.
Last Thoughts
India’s choice to put its energy backup plans into action during the crisis in West Asia and rising oil prices throughout the world shows that it can plan for the future even while the world is changing. Using reserves, identifying new sources, and setting demand limitations have given the country more time to get through this storm without slowing growth. We need to employ more renewable energy sources and become less dependent on energy from other countries. The shortcomings we showed today could affect how strong we are in the future.
It is still very vital for the future that things calm down in West Asia. A ceasefire may lower prices by $10 to $15 per barrel in just a few weeks. But if prices continue high for a long period, they might want bolder changes, like fracking in the US and making electric cars mandatory. For India’s 1.4 billion people, the message is clear: diversity isn’t just a strategy; it’s a matter of life and death. Emerging economies will be very interested in what New Delhi does next as oil prices across the world stabilize or go up even further.
As the war in West Asia pushes up oil prices around the world, India puts its preparations for backup energy into action.
