Middle East Crisis Could Push Crude & LPG Prices Sky-High in India, Warns Expert

Expert Prakash Chawla warns India faces rising crude and LPG prices as Strait of Hormuz closure threatens supply chains, hitting consumers and testing energy resilience amid Gulf tensions.

New Delhi: As tensions escalate between Iran and the United States–Israel alliance, the Indian government has moved to reassure citizens that energy supplies remain secure for now, even as global markets watch the situation nervously.

India, which is among the world’s largest players in the petroleum sector—ranked as the third-largest importer, fourth-largest refiner and fifth-largest exporter of petroleum products—faces particular concern because a major portion of its oil shipments pass through the Strait of Hormuz. With Iran shutting the route to ship movement, worries are growing about supply disruptions and potential spikes in prices.

Why the Strait of Hormuz matters for India

Nearly half of India’s oil imports travel through this narrow but crucial passage. Any prolonged disruption here can ripple through the country’s energy ecosystem—from refineries and fuel retailers to households that depend on LPG cylinders for daily cooking.

Beyond crude oil, the route is equally important for liquefied petroleum gas (LPG) and liquefied natural gas (LNG), both of which play a vital role in India’s domestic consumption and industrial activity.

Oil prices could surge if conflict deepens

A report by ICICI Bank warns that crude oil prices could climb beyond the USD 100 per barrel mark if the ongoing military escalation in Middle East results in structural damage to oil infrastructure.

Market watchers say that if tensions persist, the impact may not remain confined to global oil benchmarks alone. It could gradually feed into LPG availability, logistics costs, and inflationary pressure across sectors.

Expert explains potential impact on India

To understand the situation better, Asianet Newsable English spoke to economic affairs expert Prakash Chawla, who highlighted how deeply intertwined India’s energy supply chain is with the Gulf region.

“As the US-Israel and Iran have engulfed the entire Gulf region and even beyond, it would leave a crippling impact on the global economy, more so on India, China and other major energy importing countries. India's dependence on imports of LPG or cooking gas, LNG - industrial gas and crude oil from the Persian Gulf is so overwhelming that the closure of Strait of Hormuz is just about to impact our supply chain,” Prakash Chawla said.

Consumers may feel the heat at fuel stations

Chawla warned that if the geopolitical situation drags on, the pressure on oil prices could intensify quickly.

“If the geo-political madness continues for a few more days, crude prices would further shoot up well beyond the USD 80 per barrel (Brent) mark. Moreover, nobody would be able to guess the upside which may even reach the triple digit - well, who knows?”

“The Indian oil marketing companies cannot absorb such escalation in the crude prices and the consumers should be ready to pay more at the filling stations,” he said.

Rising LPG prices could hit households

According to Chawla, the impact may be felt not only by motorists but also by households across the country.

“Likewise, the homemakers would be burdened with the higher LPG cylinder prices which vary for domestic and commercial usages. The impact on the common man and woman would be severe as the second line impact would be seen in the entire value chain with the rising freight costs. The outlook does not seem good at all.”

“India's dependence on the Gulf oil and LPG/LNG is much more than the global supply average of 20 per cent.”

India’s heavy reliance on imports

Chawla pointed out that India’s import dependence makes the situation particularly sensitive.

“According to estimates, India imports 80-85 per cent of its LPG requirements, most of which is routed through the Strait of Hormuz (which is closed for now). Likewise, almost 35-40 per cent of its crude imports are shipped through the choked passage of Hormuz.”

He added that with so much at stake, diplomatic efforts will be crucial in easing tensions in the region.

The economic stakes for India

India currently imports close to 85 percent of its crude oil needs, mainly from Middle East and Russia. The Strait of Hormuz alone accounts for roughly half of these imports, making it one of the most critical arteries for the country’s energy security.

Economic estimates show that even a USD 1 rise in crude oil prices can increase India’s import bill by around USD 2 billion—an indication of how closely the country’s economy is tied to developments in the region.