The geopolitical situation has changed materially every passing week. Are we now looking at a genuine energy crisis or still a severe but manageable disruption?
I would still distinguish very carefully between a structural energy crisis and a severe geopolitical disruption. A structural crisis is one in which the world simply does not have enough supply capacity relative to demand. What we are seeing now is different. The world still has supply capacity, but parts of the system that move, insure, finance and route that supply have come under extraordinary stress. That distinction matters because it shapes the policy response. In a structural crisis, the central question is how to create new supply. In a geopolitical disruption, the central question is how quickly markets can reorganise, how governments can secure essential flows, and how importing economies can absorb the price shock. What has changed in recent days is that the disruption has become more operationally real for India, particularly in gas and LPG. The government has moved to strengthen gas infrastructure rules, prioritise certain categories of fuel use, and reinforce the need to diversify routes and sources. At the same time, the Prime Minister has publicly emphasised both de-escalation and the importance of keeping Hormuz open, which signals that India sees the situation as serious, but still manageable through a combination of diplomacy, logistics and economic buffers. Oil prices have also shown how event-driven this environment remains—spiking on escalation and easing on ceasefire signals—reinforcing that volatility, not absolute shortage, is the immediate challenge.
What is the most immediate risk to India right now: physical shortage, price shock, or economic spillover?
The most immediate and consistent risk is the price shock and the macroeconomic spillover that comes with it. India’s basic vulnerability is that it imports most of its crude requirement, so even if molecules are ultimately available from somewhere in the world, a sharp price increase transmits very quickly through the import bill, inflation, freight costs, exchange-rate pressure and the current account. That is why, even in periods where supply is not physically cut off, India can still experience substantial economic stress.
That said, the current episode has also shown that one cannot dismiss physical bottlenecks altogether. LPG, in particular, has become a more immediate operational problem because routing flexibility is lower and alternative cargo mobilisation takes time. India has already had to load LPG on stranded vessels and prioritise household demand over industrial use. So the hierarchy of risk is this: for crude, the dominant risk remains macroeconomic; for LPG and parts of the gas chain, the short-term logistical risk has become much more tangible than it looked a few weeks ago.
How important is the Strait of Hormuz to India’s current energy position?
Hormuz remains absolutely central. Estimates indicate that roughly 40 per cent of India’s crude imports move through that corridor, which is why any disruption there immediately becomes a national economic issue, not just an energy-sector issue. The Prime Minister’s direct conversation with the U.S. President on the need to keep the Strait open underscores that India views free navigation there as strategically vital. The current disruption is likely to reinforce the case for accelerated investment in gas infrastructure and broader fuel diversification.
The point, however, is not only that Hormuz is important. It is that India must think about Hormuz in systems terms. If a chokepoint disrupts crude, LPG and LNG at the same time, the consequences are not linear. They spill into transport fuels, cooking fuels, fertiliser economics, industrial energy use, freight, inflation, and even electricity substitution patterns. That is why the conversation has to move beyond “Do we have enough oil?” toward “How resilient is our wider energy system when one corridor becomes unstable?”
LPG appears to have emerged as a more immediate vulnerability than many expected. Why is that?
Because LPG combines high import dependence, concentrated sourcing, household sensitivity and lower flexibility in emergency substitution. India imported about 60 per cent of its LPG consumption in the previous year and around 90 per cent of those imports came from the Persian Gulf region. That is a very concentrated risk. When shipping through Hormuz becomes stressed, LPG cannot always be replaced as quickly as crude because LPG markets are less liquid, alternative cargoes take time to arrange and shipping distances can be much longer.
LPG is also politically and socially sensitive because it sits so close to everyday household consumption. You can ask the industry to curtail use for a period; you cannot do that indefinitely for households. That is why India has had to prioritise domestic and essential demand and reduce supply to some industrial users. The latest episode makes clear that LPG diversification deserves far more attention in India’s energy-security discussion than it has received so far.
Does India still have structural advantages despite these stresses?
Yes, and they remain very significant. India’s refining system is one of its major strategic strengths. Complex refineries give the country greater flexibility in processing different crude slates than many importing economies have. That flexibility matters because it allows India to respond to disruptions not only through diplomacy or reserves, but also through commercial optimisation of the crude basket. The country also has a meaningful export position in petroleum products, which can act as a partial safety valve in extreme circumstances by redirecting some flows domestically. That does not eliminate the shock, but it improves optionality.
What the latest crisis shows is that India’s strengths are real, but unevenly distributed across fuels. In crude and refining, India is relatively more flexible. In LPG and parts of the gas chain, it is more exposed. The policy challenge is to bring the weaker parts of the system closer to the resilience level of the stronger ones.
How should India think about Russian crude now, given continuing sanctions complexity and shifting flows?
India should think about Russian crude pragmatically, not ideologically. The basic principle remains the same: in a volatile world, discounted and commercially attractive barrels matter, but overdependence on any one geopolitically complicated source also creates future vulnerability. The right objective is not substitution of one concentration with another. It is broader diversification. Available data suggest that Indian refiners continue to secure large Russian volumes for upcoming delivery even amid current turmoil, consistent with their post-2022 approach of optimising for economics and flexibility.
The larger lesson is that energy strategy in a constrained and fragmented global system has to be portfolio-based. India needs access to Russian barrels where commercially and legally feasible, but it should simultaneously deepen optionality in the Atlantic Basin, North America, and other emerging sources. That is the only way to avoid turning tactical agility into strategic dependency.
What price range for oil and gas is sustainable for India’s economy in current conditions?
There is no magical number, but there are certainly workable bands. In broad terms, crude around the $70 to $80 range has historically been far easier for India to absorb without excessive macroeconomic strain. Once prices move well above that range for a sustained period, the pressure on inflation, logistics, the rupee and the current account becomes progressively more uncomfortable. Current market moves remain highly event-driven; prices can spike sharply on escalation and retrace quickly on ceasefire signals. That volatility itself is part of the problem, because businesses and policymakers do not plan around peaks—they plan around uncertainty.
For gas, the tolerable range is usually much lower than what global crisis conditions often produce. India’s gas-consuming sectors are price-sensitive, and once LNG-linked delivered prices climb too high, substitution and then demand destruction begins. The exact threshold varies by sector, but the broad principle remains that gas can support expansion only if pricing stays within a range the end-user economy can absorb. The more India wants gas to play a larger balancing and industrial role, the more it must care about both supply security and price discipline.
Could current disruptions accelerate India’s energy transition?
They may accelerate parts of it, but not in the simplistic sense that a hydrocarbon shock makes hydrocarbons irrelevant. If anything, the current episode underscores how deeply oil, gas, and LPG are embedded across transport, cooking, industry, petrochemicals, and supply chains. Renewable electricity can reduce dependence in some segments, particularly power, but it does not replace the full functional role of hydrocarbons across the economy.
What may accelerate instead is a more strategic diversification of the energy system: greater electrification where substitution is practical, continued investment in grids and storage, stronger domestic gas infrastructure, wider PNG penetration in viable urban clusters, and more serious pursuit of alternative domestic pathways using national endowments such as coal. In other words, this is less a linear transition and more a structural transformation—driven as much by energy security as by climate goals.