The two largest energy consumers in Asia, India and China, both source nearly half of their crude imports from the Middle East. Analysts say India is in a more vulnerable position because it has significantly lower inventories than China and has become more dependent on the region in the past year.
Ajay Parmar, director of energy and refining at ICIS, said China has at least six months’ worth of crude in storage, while India’s stocks are very low, which is even more evident in the current situation.
The risks stem from heightened hostilities following Israeli and US strikes on Iran, which have fueled widespread regional tensions and effectively closed the Strait of Hormuz, a vital shipping route through which about one-fifth of the world’s oil flows. The price of global benchmark Brent crude rose about 7% on Monday, and analysts warned that a protracted war could push oil costs higher.
The Middle East accounted for about 55% of India’s crude imports as of January, or about 2.74 million barrels per day, figures cited in a Reuters report showed. This marks the highest level since late 2022, as Indian refiners cut back on purchases of Russian oil amid pressure from Washington.
India’s official buffer appears limited. Oil Minister Hardeep Singh Puri told lawmakers last month that the country could store enough crude oil to last about 74 days. However, refinery sources said the current effective inventory may cover only 20 to 25 days, indicating the country’s vulnerability if shipments are disrupted for a long period of time.
Uncertain alternatives
Continued supply shortages could force India to look for alternative sources of crude. The Federal Ministry of Petroleum Xon said in a post that the country will take all necessary steps to ensure the availability of cheap fuel.
US officials did not immediately respond to a request for comment on whether Washington would allow India to resume large purchases of Russian oil without imposing a 25% tariff on imports. US Secretary of State Marco Rubio said the Treasury and Energy departments will announce measures to reduce rising electricity prices.
Asia accounts for nearly 90 percent of the Middle East’s total oil exports. Japan and South Korea are even more reliant on the region for supplies, sourcing about 95% and 70% of their oil respectively, but both maintain huge inventory buffers. Japan’s stockpiles are equivalent to 254 days of consumption, while a South Korean government official said stocks could cover about 208 days.
Widespread global impact
While Europe and the United States are not major buyers of Middle Eastern crude, analysts say any prolonged disruption through the Strait of Hormuz will push up global oil prices and affect all importing countries.
Parmar said that if the strait remains out of use for a long time, countries around the world will compete fiercely to increase the supply of barrels.
According to US data, last year the US imported less than 900,000 barrels of oil per day from the Gulf countries.
For India, the combination of increased imports and limited storage capacity exposes it to prolonged instability, particularly in the Middle East, and heightens the risks of war.
India’s Oil Import Risk
