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The disruption in the Strait of Hormuz has highlighted the urgent need for India to strengthen its long-term energy security strategy through diversified crude sourcing, larger storage buffers and reduced dependence on import-linked fuels, according to an analysis by S&P Global Energy.
The report said the ongoing supply shock has exposed structural vulnerabilities in India's energy ecosystem despite efforts to diversify crude imports in recent years. "The effective closure of the Strait of Hormuz since late February 2026 is now the dominant factor in India's oil market," the report said, adding that the episode has revealed "a deeper vulnerability: India's crude oil dependence and the resulting knock to energy security, despite ongoing crude diversification efforts." According to S&P, India must move beyond viewing energy security primarily as a procurement challenge and instead build greater resilience into its supply chain. "This crisis is a reminder that India cannot treat energy security as a simple procurement problem," the report said. The analysis suggested that India needs to create greater flexibility in its energy system by expanding sourcing options and strengthening inventory cover. "The country needs better optionality: diversified crude routes, deeper storage/inventory buffers, and credible alternatives that reduce import-linked exposure," it said. The report identified LPG as a key area of concern, noting that the country's heavy dependence on Gulf suppliers was exposed during the crisis. It said India needs alternatives that can reduce reliance on a single region for critical fuel supplies, "including for LPG, where structural dependence on the Gulf has been exposed." While the government and refiners have managed the immediate disruption through supply management measures and alternative imports, S&P cautioned against complacency if the disruption persists. "India's crisis management has worked in the near term--but a prolonged disruption limits complacency, particularly in securing sufficient feed through the end of the year," the report said. The report added that although lower fuel demand during the monsoon season may ease pressure on inventories, India must prepare for stronger consumption during the festive season later in the year when global crude flows may still take time to normalise. According to S&P, the Hormuz crisis underscores the importance of building a more diversified, flexible and resilient energy system capable of withstanding future geopolitical disruptions. (ANI)
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