India Scrambles to Secure Energy Supplies as Strait of Hormuz Remains Closed

New Delhi is facing a growing energy crisis as the closure of the Strait of Hormuz disrupts critical oil and gas supplies, triggering panic-buying of LPG and inflationary pressures. Prime Minister Narendra Modi has engaged in direct talks with Iranian President Masoud Pezeshkian, but initial efforts to secure safe passage for Indian vessels have been unsuccessful.

Modi’s Appeal Rejected

Indian Prime Minister Narendra Modi spoke with Iranian President Masoud Pezeshkian on March 13, 2026, seeking assurances for the safety of Indian nationals and the uninterrupted flow of energy resources. Though, according to reports from MEA FactCheck on X, Pezeshkian rejected Modi’s request to allow Indian ships to pass through the Strait of Hormuz.

Energy Supply Disruption

India, the world’s third-largest oil importer and second-largest consumer of liquefied petroleum gas (LPG), relies heavily on the Strait of Hormuz for approximately 50% of its crude oil needs and the majority of its LPG imports. CNBC reports that the closure of this vital waterway has led to rising energy costs and panic-buying, particularly of LPG.

Economic Impact

The disruption is already impacting the Indian economy. Citi estimates that sustained oil prices between $90 and $100 per barrel could increase India’s inflation by up to 50 basis points. Bloomberg highlights that nearly 800 Indian seafarers are stranded aboard 28 ships currently stalled in the Strait of Hormuz. Nomura has raised India’s consumer inflation forecast to 4.5% from 3.8% for the financial year ending March 2027, citing the LPG crunch as a key driver. The Indian rupee has also weakened, hovering near record lows at 92.48 against the U.S. Dollar.

Government Response

Although petrol pumps maintain adequate stocks, the government is grappling with LPG shortages. Officials have directed pollution control boards to allow the use of alternative fuels like kerosene, biomass, and coal by the hospitality sector to prioritize LPG supply to households. However, restrictions have also been placed on household access, with urban consumers facing a 25-day wait between bookings and rural households a 45-day wait. The government has already increased the price of LPG cylinders by 6.5% for most consumers.

Industry Impact

The National Restaurant Association of India reports that many restaurants are closing or reducing their menus due to the LPG shortage. India is actively diversifying its energy sources, increasing crude oil purchases from Russia to 1.46 million barrels per day in March, up from 1 million barrels in February, according to data from Kpler. India is now sourcing crude from over 40 countries.

Looking Ahead

Experts warn that India faces a significant challenge in restructuring its energy supply chains quickly and affordably. Verisk Maplecroft suggests that a prolonged closure of the Strait of Hormuz could force India into a costly and challenging reconfiguration of its energy strategy.