Mumbai (Maharashtra) [India], March 21 (ANI): The ongoing conflict in West Asia has disrupted global energy supply chains, affecting crude oil and gas flows through key routes such as the Strait of Hormuz. Experts say India has managed the situation through strategic energy diplomacy and diversified sourcing, but caution that continued hostilities could intensify supply pressures.
Anindya Banerjee, Vice President at Kotak Mahindra Securities, said India is sourcing its energy requirements from a diverse set of countries amid the disruptions.
“This is a global disruption, and it is not our war. It is a conflict involving Israel, the United States, and Iran. However, the impact is being felt worldwide. Through our energy diplomacy, we are able to engage with parties that may be adversaries to one another. We are able to secure passage for our ships through the Strait of Hormuz. India is among the few countries capable of doing this at a global scale,” he told ANI.
Banerjee noted that India is also procuring oil from Russia, highlighting the availability of floating storage.
“Russia has a large amount of oil at sea, which is now being directed toward Asian partners such as China and India,” he said.
He added that India is not currently facing a sharp price shock but is experiencing supply constraints.
“About 10 to 12 percent of oil flows and nearly 20 percent of gas flows are disrupted,” he said.
On inflation, Banerjee said the impact may remain limited if disruptions are short-lived.
“Consumer Price Index (CPI), currently around 3 to 3.2 percent, may inch toward the Reserve Bank of India’s lower band of 4 percent. However, the impact is likely to remain largely confined to headline inflation if the disruption lasts only a few months,” he said.
He added that the Reserve Bank of India has tools to support the rupee through spot and forward interventions, buy-sell swaps, and the non-deliverable forward (NDF) market.
Looking ahead, Banerjee said India is pursuing long-term strategies to reduce dependence on fossil fuels, including investments in solar energy, small modular nuclear reactors, green hydrogen, and green ammonia.
RN Bhaskar, founder of AsiaConverge, said India continues to receive crude supplies from alternative sources, particularly Russia.
“India will continue to receive oil from Russia even during the international crisis. Freight costs from Russia remain low, helping India save significantly, and insurance costs are also lower compared to supplies from Australia or South America,” Bhaskar said.
However, he cautioned that the crisis is putting pressure on India’s energy import bill and overall economy.
“India’s import bill could double, while exports remain weak due to financial strain in Europe and the United States and limited trade with Islamic countries,” he said.
Bhaskar also warned that disruptions in gas supply from the Gulf region could pose additional challenges.
“India will need to secure long-term gas deals with Russia, Australia, or the United States, as gas production cannot be easily halted once started,” he said.
Navneet Damani, Head of Research Commodities at Motilal Oswal Financial Services Ltd, highlighted the volatility in global oil markets.
“In commodity markets, geopolitical shocks often lead to swift and dramatic price reactions. In early March 2026, crude prices surged more than 50 percent, marking one of the fastest rallies in recent years as tensions in the Middle East escalated into a broader regional conflict,” Damani said.
He noted that Brent crude briefly climbed to around USD 120 per barrel, while WTI reached USD 113, reflecting a shift from supply surplus to supply anxiety.
Despite increased production by OPEC+ and stronger demand projections by the International Energy Agency (IEA), Damani said geopolitical developments drove the sharp price movements.
He added that oil markets remain highly sensitive to disruptions in the Middle East, which accounts for nearly a third of global crude exports.
“After briefly surging to USD 120 per barrel, prices retreated toward the USD 100–105 range due to profit booking and early signs of coordinated efforts by governments and producers to cushion supply shocks,” he said.
Measures such as Japan tapping its strategic petroleum reserves, discussions among G7 nations on coordinated stock releases, and additional spot cargoes from Saudi Aramco have helped stabilize immediate concerns, he added.
Damani noted that while alternative export routes such as Saudi Arabia’s East-West pipeline and the UAE’s Fujairah pipeline exist, they can handle only a limited share of total exports.
As a result, the outlook remains closely tied to developments in the Strait of Hormuz. Any prolonged disruption to tanker traffic could keep prices elevated, increase inflation risks, and intensify diplomatic efforts to restore stability.
He also pointed out that domestic prices could be influenced by volatility in the USD-INR exchange rate, which has remained elevated in recent months. (ANI)
About The Author
