<p>Mumbai: Amid the US-Israel strikes on Iran and subsequent retaliation leading to a crisis involving the Strait of Hormuz, energy supplies are going to be a crucial issue for India. </p><p>Shipping insurance costs have already jumped 50% overnight. Beyond oil, risks extend to basmati rice exports, tea trade, clean energy supply chains, and broader macroeconomic stability.</p><p>In a briefing note, Climate Trends has captured what is in store and what options are ahead. </p><p>“The recent strikes only reinforce the validity of India’s long-standing principle of strategic autonomy. In an increasingly volatile West Asian landscape, the wisdom of accelerating our clean energy ambitions becomes even more apparent for energy security. Reducing the dependence on imported conventional energy sources—oil and gas—through rapid deployment of clean technologies is no longer just a climate imperative but a strategic necessity,” said Aarti Khosla, director, Climate Trends.</p>.Oil prices expected to stay high for days, all eyes on Strait of Hormuz flows.<p>“The US-Iran war doesn't bode well for the global energy economy. In the short run, we can expect an increase in oil prices. In the medium term, if the war drags, there would be a negative impact on the global economy. The event will undoubtedly create headwinds for India's economy. India will do well to leverage its relationships to access cheaper oil in this scenario. This is a moment to bring investments to ramp up plans to scale up electrification of the power and transport sector faster as the ultimate solution to energy security,” said Vaibhav Chaturvedi, senior fellow, Council on Energy, Environment and Water (CEEW).</p><p>“Much depends on how long the conflict endures and whether risks to the Persian Gulf and the Strait of Hormuz persist. China buys roughly 90 percent of Iran’s crude exports—about 1–1.5 million barrels per day—that might otherwise struggle under sanctions. If those volumes were removed because of tighter enforcement or conflict damage, the effects would extend far beyond China. Beijing also holds the world’s largest strategic oil and gas reserves, giving it some capacity to cushion domestic shocks and potentially act advantageously as a swing player in a prolonged crisis,” noted Vivek Kelkar, researcher and analyst working at the intersection of geo-economics and sustainability.</p><p>“For India, the impact would be indirect but significant. With nearly 90 percent import dependence, every $10 per barrel rise increases the annual import bill by about $13–14 billion, widening the current account deficit, pressuring the rupee and adding to inflation,” added Kelkar.</p><p>“The past few months have been challenging for India’s crude supplies- first the shift away from discounted Russian Urals to avoid US tariffs, and now the potential volume impact from disruptions in West Asia. While these disruptions may be short-term, India cannot simply afford to remain hostage to geopolitical volatility... Moments like these offer an opportunity to recalibrate its mobility policy, through electrification and a faster expansion of ethanol blending in the near term,” said Duttatreya Das, energy analyst-Asia, Ember.</p><p>“India’s policy of strategic autonomy has so far helped it navigate the choppy waters of geopolitics but the balancing act has become increasingly tough. The conflict in west Asia and its repercussions raise the risks to its supply chains, test energy security and increase insurance costs and fuel inflation if energy prices remain elevated, as is expected if the Strait of Hormuz is blocked. The Iran conflict which comes just when India was on the verge of a trade deal with the US, is expected to put strain on the assiduously built relationships with GCC countries and capital flows may be impacted,” added Archana Chaudhary, associate director, Climate Trends.</p><p><strong>Strait of Hormuz – India’s Energy Lifeline</strong></p><p>● This passage, one of the world’s most strategically critical maritime oil corridors, links Middle Eastern oil exporters to global markets—a majority of which are in SouthEast Asia, and lies largely within Iranian territorial waters.</p><p>● 20-25% of global crude oil supply runs through this crucial maritime passageway</p><p>● South-Asia impact: 40% of total crude oil consumption of India, China, Japan, and South</p><p>Korea, through the Strait of Hormuz, affecting energy consumption in these countries.</p><p>● According to reports, Iran has been relaying messages on VHF radio, warning ships that they will not be allowed to pass.</p><p>● India’s reliance on this oil chokepoint has risen alarmingly.</p><p>● India imports around 90% of crude oil and the conflict has put India at risk</p><p>● After US pressure, restricting India from buying Russian Oil, India has tried to diversify its</p><p>imports and pivoted more towards gulf countries, exposing it to Hormuz-lined risks.</p><p>● India also imports crude from over 40 countries, which helps it change the mix of oil imports depending on prices.</p><p>+ India has diversified its imports to the US, West Africa, Russia and Latin America</p>
<p>Mumbai: Amid the US-Israel strikes on Iran and subsequent retaliation leading to a crisis involving the Strait of Hormuz, energy supplies are going to be a crucial issue for India. </p><p>Shipping insurance costs have already jumped 50% overnight. Beyond oil, risks extend to basmati rice exports, tea trade, clean energy supply chains, and broader macroeconomic stability.</p><p>In a briefing note, Climate Trends has captured what is in store and what options are ahead. </p><p>“The recent strikes only reinforce the validity of India’s long-standing principle of strategic autonomy. In an increasingly volatile West Asian landscape, the wisdom of accelerating our clean energy ambitions becomes even more apparent for energy security. Reducing the dependence on imported conventional energy sources—oil and gas—through rapid deployment of clean technologies is no longer just a climate imperative but a strategic necessity,” said Aarti Khosla, director, Climate Trends.</p>.Oil prices expected to stay high for days, all eyes on Strait of Hormuz flows.<p>“The US-Iran war doesn't bode well for the global energy economy. In the short run, we can expect an increase in oil prices. In the medium term, if the war drags, there would be a negative impact on the global economy. The event will undoubtedly create headwinds for India's economy. India will do well to leverage its relationships to access cheaper oil in this scenario. This is a moment to bring investments to ramp up plans to scale up electrification of the power and transport sector faster as the ultimate solution to energy security,” said Vaibhav Chaturvedi, senior fellow, Council on Energy, Environment and Water (CEEW).</p><p>“Much depends on how long the conflict endures and whether risks to the Persian Gulf and the Strait of Hormuz persist. China buys roughly 90 percent of Iran’s crude exports—about 1–1.5 million barrels per day—that might otherwise struggle under sanctions. If those volumes were removed because of tighter enforcement or conflict damage, the effects would extend far beyond China. Beijing also holds the world’s largest strategic oil and gas reserves, giving it some capacity to cushion domestic shocks and potentially act advantageously as a swing player in a prolonged crisis,” noted Vivek Kelkar, researcher and analyst working at the intersection of geo-economics and sustainability.</p><p>“For India, the impact would be indirect but significant. With nearly 90 percent import dependence, every $10 per barrel rise increases the annual import bill by about $13–14 billion, widening the current account deficit, pressuring the rupee and adding to inflation,” added Kelkar.</p><p>“The past few months have been challenging for India’s crude supplies- first the shift away from discounted Russian Urals to avoid US tariffs, and now the potential volume impact from disruptions in West Asia. While these disruptions may be short-term, India cannot simply afford to remain hostage to geopolitical volatility... Moments like these offer an opportunity to recalibrate its mobility policy, through electrification and a faster expansion of ethanol blending in the near term,” said Duttatreya Das, energy analyst-Asia, Ember.</p><p>“India’s policy of strategic autonomy has so far helped it navigate the choppy waters of geopolitics but the balancing act has become increasingly tough. The conflict in west Asia and its repercussions raise the risks to its supply chains, test energy security and increase insurance costs and fuel inflation if energy prices remain elevated, as is expected if the Strait of Hormuz is blocked. The Iran conflict which comes just when India was on the verge of a trade deal with the US, is expected to put strain on the assiduously built relationships with GCC countries and capital flows may be impacted,” added Archana Chaudhary, associate director, Climate Trends.</p><p><strong>Strait of Hormuz – India’s Energy Lifeline</strong></p><p>● This passage, one of the world’s most strategically critical maritime oil corridors, links Middle Eastern oil exporters to global markets—a majority of which are in SouthEast Asia, and lies largely within Iranian territorial waters.</p><p>● 20-25% of global crude oil supply runs through this crucial maritime passageway</p><p>● South-Asia impact: 40% of total crude oil consumption of India, China, Japan, and South</p><p>Korea, through the Strait of Hormuz, affecting energy consumption in these countries.</p><p>● According to reports, Iran has been relaying messages on VHF radio, warning ships that they will not be allowed to pass.</p><p>● India’s reliance on this oil chokepoint has risen alarmingly.</p><p>● India imports around 90% of crude oil and the conflict has put India at risk</p><p>● After US pressure, restricting India from buying Russian Oil, India has tried to diversify its</p><p>imports and pivoted more towards gulf countries, exposing it to Hormuz-lined risks.</p><p>● India also imports crude from over 40 countries, which helps it change the mix of oil imports depending on prices.</p><p>+ India has diversified its imports to the US, West Africa, Russia and Latin America</p>