Global energy markets often appear vast and diversified, supported by complex networks of producers, shipping routes, and financial systems. In reality, a remarkable share of the world’s oil and gas trade still depends on a single narrow passage. The Strait of Hormuz, located between Iran and Oman, is only about 33 km wide, yet it carries roughly 20% of the world’s oil supply and a significant share of global liquefied natural gas. The escalating Iran conflict in early 2026 has once again exposed how fragile this dependence is. 

What policymakers often describe as a chokepoint has functioned more like a switch. When tensions rose, shipping through the strait slowed dramatically, with traffic at one point falling by as much as 80%, leaving vessels stranded and supply chains disrupted.

Around 20 million barrels per day of oil transit the corridor under normal conditions, a volume that no alternative routes can fully replace. When disruption removed around 8 million barrels per day of crude oil from the market, prices reacted immediately. Brent crude surged above $100 per barrel, briefly reaching nearly $120 per barrel, levels not seen since 2022. 

Multi-Layered Structural Vulnerability

The International Energy Agency coordinated a 400-million-barrel release from strategic reserves,  the largest in history. Even so, reserves can only cushion short-term shocks; they cannot substitute for continuous supply. A large share of the world’s liquefied natural gas (LNG), especially from Qatar, must pass through Hormuz. When flows were interrupted, global supply tightened sharply, removing close to 20% of LNG exports from the market.

For India, this global disruption translates into a multi-layered structural vulnerability. The country imports nearly 90% of its crude oil, of which an estimated 2.5 to 2.7 million barrels per day transit the strait. In the case of liquefied petroleum gas (LPG), India imports around 60% of its total demand, and 90% of those imports move through this same route. Shipping disruptions in the strait immediately hit India’s supply chain, leaving 22 tankers stranded and triggering a 17.3% year-on-year drop in LPG consumption within weeks. What matters is not just the scale of the decline, but the speed at which a distant conflict translated into domestic disruption.

The country’s strategic petroleum reserves stand at around 5.33 million tons, covering roughly 9-10 days of crude consumption. When combined with refinery and commercial inventories, India’s overall petroleum stockpile now covers closer to 60-74 days of demand. Yet much of this stock is commercially held rather than centrally controlled, limiting how quickly it can be deployed in a crisis. This imbalance creates a critical blind spot: the most socially sensitive fuels have the weakest safety nets. 

Natural gas shows a similar pattern: India imported approximately 25-27 million tons of LNG last year, with Qatar alone supplying around 40% of imports. Since a large share of this LNG must transit this corridor, disruptions affected energy availability, fertilizer production, and electricity generation. When long-term Qatari cargoes were disrupted, LNG prices surged to $25 per million British thermal units, nearly double typical contract rates across Asia.

Cascading Effects of Disruption

There is also a demand-side dimension that deepens vulnerability. India’s LPG consumption has risen from about 21.61 million tons in 2016-17 to 30.86 million tons in 2025-26, reflecting a structural shift toward cleaner cooking fuels. This means that dependence on the strait is not declining; it is increasing alongside demand growth. The shift to cleaner fuels, while necessary, is deepening exposure to the same chokepoint. The structural imbalance is therefore clear: India has diversified suppliers but not routes, and increased access to energy without strengthening resilience in delivery systems.

The economic implications of this exposure are substantial. Every $10 increase in crude oil prices can widen India’s current account deficit by approximately 30-40 basis points, underscoring that energy shocks are macroeconomic shocks in disguise. At the sectoral level, the effects are uneven but deeply interconnected: LNG shortages affect fertilizer plants and power generation, LPG shortages affect households and small businesses, and crude oil disruptions affect transport fuels and industrial production. Because all three remain tied to the same route, a single disruption creates cascading effects across the entire Indian economy.

India’s diversification strategy, often cited as a mitigating factor, provides only partial relief. The country now sources crude from over 40 countries, and in recent years has increased imports from Russia, the United States, and West Africa. In fact, about 70% of crude imports are now routed outside Hormuz, reflecting a conscious shift in sourcing strategy.

 However, this diversification has limits. First, it is uneven across fuels. LNG and LPG remain heavily tied to Gulf suppliers, many of whom have no alternative export routes outside Hormuz. Second, even for crude, supply diversification does not eliminate route dependence. A significant share of Middle Eastern oil remains cost-competitive and logistically efficient, ensuring continued reliance on the same corridor. The clear reality is: markets diversify when it is economical, but not always when it is strategically necessary.

The Strait of Hormuz, therefore, remains a critical artery for an economy that is both energy-hungry and import-dependent. When it functions smoothly, it enables efficiency and growth. When it is disrupted, it exposes the underlying fragility of India’s energy architecture. Expanding strategic reserves, especially for LPG and LNG, accelerating investment in alternative transport corridors, and diversifying not just suppliers but routes must become central to India’s energy policy. Without this shift, the paradox will persist: an energy system built for growth, but exposed by a passage just 33 km wide.

(The author is a final-year undergraduate student at the University of Delhi. She works on international trade and supply chains, and writes on geopolitics and global economic developments with a policy-oriented lens. Views expressed are personal. She can be contacted at nandymoulika@gmail.com).