Gulf energy disruption proves India must diversify routes, increase reserves

New Delhi, Oct 1 (IANS) Disruption to Gulf energy infrastructure poses strategic and economic risks for India and highlights the need for a more diversified and resilient energy strategy, a new report has said.

The report from India Narrative called for alternative supply routes, increase in reserves and renewable energy.

“Alternative ports, pipelines, storage facilities and maritime corridors can reduce exposure to any single choke point. Strategic petroleum reserves can provide temporary protection against sudden disruptions and give policymakers additional time to secure alternative supplies,” the report noted.

While renewables and green fuels cannot immediately replace hydrocarbons, they act as a long‑term hedge that increases resilience to external shocks.

India remains heavily dependent on the Gulf and the Strait of Hormuz for hydrocarbons, with about 60 per cent of its crude oil and LNG imports and nearly 85 per cent of LPG shipments transiting the chokepoint.

Disruption to Gulf LPG supplies has higher immediate social impact than fluctuations in some industrial energy commodities as LPG is directly connected to household consumption.

The huge concentration of energy supplies from the Gulf makes India vulnerable to supply shocks that can widen the import bill, strain the current account and feed domestic inflation.

The impact extends to sectors beyond oil and gas such as transportation, aviation, logistics, petrochemicals, manufacturing and agriculture, with a prolonged increase in crude prices causing second-order effects throughout the Indian economy.

While Gulf suppliers historically accounted for nearly 88 per cent of India’s LPG imports, New Delhi has shown adaptability by sourcing more from alternative suppliers, including the United States, after the West Asian conflict. India has also diversified LNG supplies to countries such as Oman, Nigeria, Trinidad and Angola, and expanded crude purchases from Russia to shore up refinery feedstock.

The report noted that India’s LNG imports after global disruption declined much less than anticipated suggesting the value of diversified sourcing.

“Crude oil presents a distinct challenge due to India’s huge refining system requiring large and continuous supplies,” the publication said.

It noted that India cannot afford excessive dependence on any single geographical region, even if the area provides commercially viable oil and gas supplies.

–IANS

aar/pk