Recent attacks on vessels and energy infrastructure in the Gulf are pushing up costs and exposing vulnerabilities in India’s heavy dependence on Middle Eastern gas imports, with potential ripple effects on inflation and fiscal stability.
Recent attacks on vessels linked to the UAE and on Saudi energy infrastructure are unlikely to leave India short of crude oil, but they are pushing up the cost of bringing that oil to market and exposing a far bigger weakness in cooking gas and natural gas supplies.
Energy analysts say India’s wider sourcing base has softened the risk of an immediate crude shortage. Even so, a prolonged flare-up in the Gulf could lift freight rates, war-risk insurance and the overall import bill, with knock-on effects for the rupee and inflation. According to LiveMint, Indian refiners have already been leaning more heavily on the UAE’s Fujairah and Khor Fakkan ports as alternative routes to the Strait of Hormuz, but those workarounds are not immune to rising security risks.
The threat became more acute after ADNOC said one of its vessels was struck by a missile while passing through the Strait of Hormuz on August 8. The company said it has faced repeated attacks on its fleet since the conflict began, while the Houthis claimed responsibility for a drone strike on Saudi Aramco’s Jazan refinery. Kpler data cited by ThePrint shows the UAE was India’s second-largest crude supplier in July, behind Russia, with Saudi Arabia in third place.
Analysts quoted by ThePrint said the key issue is not whether oil can keep flowing, but whether each shipment becomes materially more expensive. That view is echoed by JM Financial, which warned that LNG cargoes could take the hardest hit if traffic through the Strait of Hormuz is disrupted, while crude buyers would be better able to switch to suppliers in the US, Africa or South America. The bigger problem, it said, is that gas cargoes do not have comparable detours.
India’s dependence on the Gulf is particularly sharp in gas. Industry estimates cited by ThePrint and other market reports suggest roughly 80% to 90% of LPG imports and about half of LNG imports come from the Middle East, leaving households, fertiliser plants and gas-fired power stations more vulnerable than the crude market. Research notes from March also warned that any deeper disruption in Hormuz could quickly feed through to fertiliser costs, the current account deficit and broader fiscal pressure.
Even where cargoes keep moving, the extra bill is already building. Praveen Rai of Grant Thornton Bharat told ThePrint that war-risk premiums on some voyages have climbed sharply, making a single tanker trip much more expensive. That creates a security challenge as well: Indian authorities have previously advised shipping firms against using Indian crew on Hormuz routes after fatal attacks on seafarers, forcing New Delhi to balance energy security with crew safety.
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