Strait of Hormuz: India’s oil supply risks in 2026

Why the latest maritime attack matters

The attack by Iranian forces on a Cyprus-flagged ship carrying Indian crew members on Sunday has renewed concern across shipping lines and seafarers’ organisations. The incident has also revived worries about potential disruption to supplies of fuel and fertiliser moving through the Strait of Hormuz. Officials indicated that India’s maritime regulator, the Directorate General of Shipping (DG Shipping), is closely tracking developments and could issue a fresh advisory for seafarers.

Even though officials said almost all India-bound ships, barring a few, have so far transited the strait safely, the incident has increased uncertainty. The immediate concern is about the movement of vessels from India to the West Asia region to pick up new consignments. An official tracking the situation said hopes of normalcy returning have been pushed back.

DG Shipping watch and a possible advisory

Maritime risk is now central to operational planning for ship operators using the Strait of Hormuz. Officials said the regulator is keeping a close watch, and the possibility of a fresh advisory signals heightened risk management. Such advisories typically guide seafarers and shipowners on routing, safety protocols, and insurance considerations.

The text also suggests that any plan to return to normal operating assumptions could be delayed. In shipping, even small changes in perceived risk can alter vessel availability, scheduling, and the willingness of insurers to cover voyages on standard terms.

Petroleum ministry stance: stocks adequate, monitoring ongoing

No official reaction was available from the petroleum ministry on the specific incident and its likely impact. But a senior official said the ministry, along with oil refiners, was closely monitoring the situation. The official added India had enough stocks of crude oil, petroleum products, and gas, and that cargoes had been tied up from countries in other parts of the world.

The same official described the posture as “wait-and-watch” and said authorities hoped vessel movement would continue through the strait. The official also stated that the latest development would not impact India’s energy supplies, while noting that the market impact on global crude oil prices would be clearer when markets reopened Monday.

Refiners face a tougher crude slate problem

Beyond shipping, the Middle East conflict has complicated refining calculations for Indian refiners. The issue is not only how much crude is available, but also what kind of crude is available. Indian oil refiners are modifying operations to handle a wider range of complex crude grades and to boost production of fuels that are in strong demand, as the Iran conflict and disruptions around the Strait of Hormuz push them toward alternative suppliers.

Ujjal K Mukherjee, Chief Technology Officer at Lummus Technology, told ET that geopolitical turmoil has affected supplies from several oil-producing regions that traditionally cater to India. This has required refiners to process crude varieties outside their usual feedstock mix. Lummus said technology providers work with refiners to improve product yields, minimise operational challenges, and enhance flexibility of existing infrastructure.

Imports shift: Latin America, Africa, Russia and a return of Iranian barrels

A Reuters report from Delhi said Indian refiners shifted focus to imports from Latin America and Africa after disruptions in Middle Eastern supplies due to the Israeli-U.S. conflict with Iran. Trade sources cited constrained shipping routes through the Strait of Hormuz.

According to preliminary data from Kpler, Indian refiners increased imports from Venezuela, Brazil, Angola, and Nigeria during April and May, while also maintaining purchases of Russian oil. The same account said that last month India did not import any oil from Iraq as exports were suspended, and India received Iranian oil for the first time in seven years, following a temporary waiver from Washington aimed at stabilising global oil prices.

Inventories and operational risk: Kpler flags a decline

The text also cites estimates from commodities analytics firm Kpler stating that India’s crude oil inventories declined by around 15% since the US-Iran conflict erupted in late February. The reason given was that refiners continued operating at steady processing levels even as import volumes fell.

Analysts referenced in the text said that if disruptions persist for an extended period, refiners may have to scale back refinery runs or reduce crude processing activity. The combination of lower inflows and steady processing is highlighted as a key operational constraint.

Government economic review: shipping volumes and cost pressures

India’s March 2026 Monthly Economic Review (cited via Investing.com) said disruptions to shipping through the Strait of Hormuz have tightened global energy flows. The report stated ship transits fell to about one vessel a week from 200-300 earlier, constraining hydrocarbon movement and raising energy and logistics costs.

The same review said crude oil prices doubled over a short span and freight costs surged due to higher tanker rates, bunker fuel prices, and war-risk insurance premiums. It described a “double squeeze” of crude not coming in and product not going out, warning of refinery shutdowns and storage constraints that could delay recovery.

Key data points at a glance

India’s import volumes: March shock, widening gap

The text provides a snapshot of the immediate import impact. India’s crude oil imports slipped 23% so far in the month compared with February as inflows from the Gulf contracted. For March 1-18, India received 81 million barrels of crude, down from 105 million barrels in the same period last month, according to Xavier Tang, senior market analyst at Vortexa.

Middle East supplies to India fell sharply to 22.4 million barrels during March 1-18, from 59.9 million barrels in the same period last month, Tang said. If the disruption continued through March, total monthly volumes were projected at 115-125 million barrels versus a typical range of around 150 million barrels, according to Nikhil Dubey, senior refining analyst at Kpler.

Oil ministry statement: 60-day supply cover and 41 suppliers

A Reuters report from Delhi in March said India secured crude oil supplies for the forthcoming 60 days, aiming to keep fuel availability stable despite interruptions in shipments from the Middle East. The government attributed part of the buffer to increased crude availability in global markets, particularly from Western sources.

It also said that, using a temporary waiver from the U.S., Indian refiners intensified purchases of Russian crude to bridge the supply gap. The ministry stated that India was receiving more crude oil from over 41 suppliers worldwide than what was previously being supplied through the Strait.

Market impact: what is changing right now

The article’s facts point to four immediate pressure points for India: (1) shipping risk and uncertainty for vessels transiting or routing near the Strait of Hormuz, (2) a fast-changing crude import mix, (3) inventory drawdowns driven by steady processing amid lower inflows, and (4) higher delivered costs from freight and insurance premiums.

Prices had begun rising toward the end of the fiscal year as geopolitical risks intensified. With the Indian crude basket at US$113.57 per barrel on March 11, 2026, the cost of imports becomes a more direct macro risk, even when physical supply is claimed to be adequate in the near term.

Analysis: why the story matters for refiners and investors

For refiners, the central operational risk is flexibility. As the text notes, disruptions do not only reduce volumes; they alter crude quality and availability. Processing unfamiliar grades can require adjustments in refinery operations, product yield optimisation, and technology support, especially when the goal is to sustain output of fuels in strong demand.

For markets, the key takeaway is that supply security is being managed through diversification. The shift toward Latin America and Africa, continued Russian buying, and even a temporary return of Iranian barrels after seven years indicate how quickly sourcing strategies can change when chokepoints become constrained.

Conclusion

The attack on a Cyprus-flagged ship with Indian crew has added a fresh layer of uncertainty to an already stressed Strait of Hormuz corridor. Officials say India has adequate stocks and has secured crude supplies for about 60 days, but import flows, inventories, and freight costs remain sensitive to further disruption. The next clear signal for markets, as the text notes, is expected when global crude oil prices react after trading resumes.