India Turns to Russia Amidst Hormuz Crisis

As conflict and disruptions hit vital shipping lanes in West Asia, India has significantly reshaped its energy imports. In March 2026, the country sharply increased its crude oil purchases from Russia while seeing major drops in Liquefied Petroleum Gas (LPG) and Liquefied Natural Gas (LNG) imports. This strategic change shows India actively managing global energy supply challenges.

India Boosts Russian Crude Purchases

India's use of Russian crude oil rose sharply in March, with imports jumping 94% to 2.06 million barrels per day (bpd) from 1.06 million bpd in February. This increase, partly enabled by a temporary US waiver for oil already in transit, boosted Russian crude's share of India's total imports to 46.8% in March, up from 20.4% in February. This trend mirrors other Asian nations like the Philippines, South Korea, and Vietnam, which are also buying more Russian oil due to Middle Eastern supply issues. India and China now account for about 85% of Russia's oil exports. Major Indian refiners, including Indian Oil Corporation and Reliance Industries, have led this procurement push.

Hormuz Disruptions Slash Gas Supplies

The Strait of Hormuz, a crucial route for about 20-21% of global oil and 25% of LNG shipments, is now a key source of energy insecurity. Disruptions there led to a 40% drop in India's LPG imports. Reports show LPG imports fell over 45% in March to 1.12 million tonnes from 2.04 million tonnes in February. Adding to the pressure, LNG imports from Qatar plunged 92% after QatarEnergy declared force majeure. This declaration, reportedly linked to an Iranian missile strike on its Ras Laffan complex, has disabled 17% of Qatar's LNG export capacity, with repairs expected to take three to five years. The impact on refined products like diesel, gasoline, LPG, and jet fuel is also expected to be severe.

Asia's Shared Supply Challenge

This crisis highlights shared challenges for Asian economies, which typically rely on the Middle East for 60-80% of their crude imports. The Philippines, facing an energy emergency, received its first Russian ESPO crude cargo in six years, while South Korea got naphtha shipments amid shortages. India, traditionally dependent on Middle Eastern producers, has expanded its supplier base from 27 to 40 countries. Now, about 70% of its crude imports use alternative sea routes. Public sector oil companies have also secured annual LPG imports from the US. Domestic LPG production, now meeting 60% of demand, and a 20% ethanol blend in petrol, further strengthen India's energy security.

Challenges and Risks Ahead

Despite these moves, India's energy security faces significant risks. Increased reliance on Russian oil, while offering discounts, brings geopolitical dangers and potential scrutiny from Western nations, especially given past US sanctions and EU/UK agreements. The long-term disruption to LNG from Qatar presents a major challenge. The Strait of Hormuz remains a critical vulnerability; disruptions could affect refined product supplies and cost India an estimated $9-11 billion annually if it must shift away from Russian crude. Furthermore, energy price shocks can impact global food security by raising fertilizer and food costs due to disruptions in chemical production.

Outlook for India's Energy Future

Major Indian energy companies like ONGC (PE ratio ~8.9x, market cap ~₹3.6 lakh Cr), IOCL (PE ratio ~5.5x, market cap ~₹1.9 lakh Cr), and BPCL (PE ratio ~4.9x, market cap ~₹1.2 lakh Cr) are navigating this complex situation. Analysts expect Russian oil purchases to continue into April, with potential supply from Iran and Venezuela. While geopolitical tensions and supply chain issues persist, India's strategy of diversifying suppliers, increasing domestic production, and investing in alternative fuels like biogas and ethanol is helping it manage market volatility. The country's ability to adapt and secure energy supplies will be vital for its economic growth and its 2070 net-zero goals, especially in a global energy landscape increasingly shaped by uncertainty and political factors.