Historically, sharp increases in oil prices have been among the biggest sources of macroeconomic instability for India. It was therefore unsurprising that when tensions in West Asia escalated, many thought that India would once again face an energy and economic crisis, derailing its growth path. It revived memories of the 1973 oil shock and the 1991 balance-of-payments crisis, with concerns over soaring fuel prices, imported inflation, and pressure on the external account. After all, India imports almost 90% of its crude oil and remains heavily dependent on the Gulf for oil, gas and fertilizers.
This time around, however, when the Strait of Hormuz was the epicentre of global anxiety, India proved not only the sceptics at home and abroad wrong, but also seems to have emerged stronger in managing its energy needs. Was this resilience of India a matter of luck, or was it the outcome of deliberate policy choices, institutional learning, and strategic preparation?
Few major economies were as vulnerable to the disruption in the Strait of Hormuz as India, the world’s third-largest oil importer. Heavy dependence on imported crude and LPG, combined with rising freight costs and maritime risks, created conditions for a severe external shock. Within weeks, the Indian crude basket crossed $120 per barrel; the import-linked cost of a domestic LPG cylinder rose above ₹1,600; and war-risk premiums escalated sharply. By conventional measures, India appeared particularly vulnerable. However, the real challenge was not merely managing higher energy costs but preventing a global supply disruption from translating into inflation and shortages at home.
Against all expectations, one of the world’s most energy import-dependent economies turned out to be among the most price-resilient; India contained fuel and cooking gas inflation better than many advanced and emerging peers.
The numbers tell an extraordinary story. Petrol prices in India rose by just 7.5% during the crisis, compared with nearly 14% in Germany, 19% in the U.K., 45% in the U.S., over 50% in Pakistan and the Philippines, and almost 90% in Myanmar. The contrast was even starker in diesel prices. While the UAE saw prices surge by about 85%, India limited the increase to just 8%.
One saw a similar story in the kitchen. Even though India imports nearly 60% of its LPG requirements, a domestic cylinder continued to cost ₹942, or ₹642 for Ujjwala beneficiaries, which was cheaper than what it cost in Pakistan, Nepal, and Sri Lanka, and dramatically lower than in the U.S., Australia and Canada.
However, the cushion came at a cost, as state-run Oil Marketing Companies (OMCs) incurred ₹74,781 crore in losses on petrol, diesel, and LPG sales up to June 30 as global crude prices surged during the West Asia crisis. But that cost shows you the big picture. Instead of passing the full shock to consumers, the government and public-sector OMCs absorbed it, protecting household budgets and keeping fuel and cooking gas affordable throughout the crisis.
While several factors contributed to India’s resilience during the West Asia crisis, four stand out. The first lesson of the crisis is that strategic relationships are themselves a form of energy security. In times of crisis, relationships matter as much as reserves. Decades of engagement with Iran and key Gulf partners ensured that channels of communication remained open even when tensions were at their highest. Iran’s decision to facilitate the movement of Indian ships and the willingness of Gulf producers to continue supplying energy underscored a simple reality: foreign policy can be as important to energy security as oil fields.
Second, India had quietly built an insurance policy against geopolitical shocks by diversifying its supplier base. Energy partnerships stretching from Russia and the U.S. to Africa and Latin America gave India the flexibility to withstand disruptions far better than in previous crises. In geopolitics, putting all your energy eggs in one basket is no longer an option.
Third, the crisis vindicated a decade of energy planning. India had quietly built multiple layers of resilience such as higher ethanol blending, a rapidly expanding renewable energy base, larger strategic reserves and stronger refining capacity. These investments did not prevent the crisis, but they made the economy better equipped to absorb it.
Fourth, the crisis reflected the value of a whole-of-government approach, reinforcing Prime Minister Narendra Modi’s emphasis on breaking down ministerial silos and strengthening institutional coordination. The Ministries of External Affairs, Petroleum and Natural Gas, Ports, Shipping and Waterways, the Indian Navy, and the National Security Council Secretariat worked in close coordination to monitor risks, manage logistics, and protect energy supplies.
The result was a coordinated national response that turned potential disruption into an exercise in resilience.
The recent crisis shows us that the foundations of resilience are laid in years of preparation, and not in moments of panic. India’s response reflected the dividends of strategic foresight, diplomatic outreach and whole-of-government coordination. As global uncertainties deepen, this resilience could become a defining pillar of ‘Viksit Bharat’.
Sachin Kumar Sharma is Director General, RIS, New Delhi. Views expressed are personal
Published - July 09, 2026 01:45 am IST