Russian Oil May Cushion India's Supply Amid Hormuz Tensions, But LPG Remains Exposed

Coordinated US–Israel strikes on Iran on February 28 have sharply escalated tensions in West Asia, with cross-border missile attacks being reported across Gulf nations. The initial strike, which reportedly killed Supreme Leader Ayatollah Ali Khamenei along with several senior IRGC, intelligence and national security officials, has led to Iran targeting US assets across the UAE, Bahrain, Kuwait and Qatar.

According to a report by the Associated Press, an oil tanker in the strategic Strait of Hormuz was attacked, injuring four crew members. The Palau-flagged vessel Skylight had Indian and Iranian crew on board. While no group has claimed responsibility, Tehran had earlier threatened ships transiting the strait.

The route is crucial for global as well as India’s energy trade, as nearly 20% of global oil flows through the strategic waterway that connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. Oman’s state news agency has also said its Duqm port was targeted in a drone attack, marking a rare spillover into the country, which has traditionally stayed neutral and acted as a mediator between Iran and the US.

For India, the route is even more important, as it serves as the transit path for nearly 50% of its crude oil supply and 80% of its liquefied natural gas, according to data from global real-time data and analytics provider Kpler.

Analysts say that as tensions escalate, the impact could trigger ships to reroute their vessels and push energy prices higher. For India, that would mean an increase in energy import bills. Even before the airstrikes in Iran, Brent crude had already climbed to a seven-month high of around $72.8 per barrel.

A note by JM Financial says that if the Strait of Hormuz is disrupted, crude prices could rise above $90, and a wider regional conflict could push oil past $100 per barrel. “For India, the impact is significant, every $1 increase in crude adds roughly $2 billion to the annual import bill, worsening the trade balance. In the near term, markets may shift focus from corporate earnings to oil price movements,” the brokerage noted.

The increase in costs would also come from freight rates, which could rise sharply due to vessel operators’ hesitancy, creating effective tanker tightness and increasing insurance costs through elevated war risk premiums.

What alternatives does India have?

According to Kpler’s senior research analyst for refining and modelling, Nikhil Dubey, India does have a crude buffer.

Based on Kpler inventory data, he said commercial crude stocks are around 100 million barrels, with an additional 39 million barrels held in strategic reserves at Mangalore, Padur and Visakhapatnam.

“With imports via the Strait of Hormuz averaging roughly 2.5 million barrels per day (about 50% of India’s about 5 mb/d total crude imports), these combined reserves could theoretically cover close to 60 days of imports in a disruption scenario from a crude perspective. In addition, companies also hold refined product inventories, which would extend effective coverage further,” Dubey told Outlook Business.

Data shows that India’s crude oil imports routed via the Strait of Hormuz from key Gulf suppliers, including Iraq, Saudi Arabia, the UAE, Kuwait and Qatar, have ranged between roughly 2.20 million barrels per day (mb/d) and 2.73 mb/d between February 2025 and February 2026. In recent months, inflows have stayed elevated, with December 2025 to February 2026 averaging about 2.6 mb/d, underscoring India’s continued reliance on shipments transiting this critical energy corridor.

At the same time, Kpler’s senior research analyst noted that Russian barrels currently floating in the Arabian Sea without clear buyers are likely to be absorbed quickly as Indian and Chinese refiners move to secure supply in the current environment.

However, it would be crucial to note how the US reacts to any such purchases, as the recently announced India–US trade deal framework and a subsequent tariff reduction from 50% to 18% on India, as per the US President, was based on the promise that New Delhi would stop buying from Moscow. The Indian government has so far not confirmed any such condition.

What about LPG supplies?

While crude oil supply can be compensated for in the short term, LPG is another story. Data show that India’s total LPG imports ranged from about 1.83 million tonnes to 2.03 million tonnes per month from February 2025 to February 2026. Of this, between about 1.78 million tonnes and 1.66 million tonnes, respectively, came from key Gulf suppliers such as the UAE, Qatar, Kuwait and Saudi Arabia. Supplies peaked at around 1.94 million tonnes in December 2025 before easing to about 1.66 million tonnes in February 2026.

The data highlights India’s heavy dependence on Gulf-origin LPG shipments transiting Hormuz, underlining the vulnerability of domestic LPG supply to any regional disruption.

“India is heavily dependent on Gulf LPG imports routed through Hormuz and does not have any strategic LPG reserves,” said Dubey, adding that LPG sourcing flexibility and storage buffers are limited, making the supply chain significantly more sensitive to regional instability.