India’s energy strategy needs price correction

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The Strait of Hormuz is no longer just a geopolitical flashpoint; it has become the fault line of the global energy economy. As tensions in West Asia continue to disrupt shipping through one of the world’s most critical maritime corridors, countries across the globe are confronting a harsh reality: energy security is now inseparable from geopolitics. For India, which depends on imports for the overwhelming majority of its crude oil needs, the crisis has exposed both the strength of recent policy interventions and the limits of shielding consumers indefinitely from market realities.

The immediate impact of the conflict has been visible in global crude markets. Brent prices have surged sharply amid fears of prolonged disruption to Gulf supplies, while freight costs and marine insurance premiums have climbed to multi-year highs. Shipping routes are being diverted around the Cape of Good Hope, extending delivery timelines by weeks and significantly growing transportation expenses. Global gaseous markets, too, remain under pressure following disruptions linked to the shutdown of key liquefied natural gaseous export infrastructure in Qatar. Despite this turbulence, the crisis has not hit Indian consumers as ferociously as it should be so far. Petrol and diesel prices at Indian fuel pumps have remained relatively stable, hovering near ₹95 per litre in many cities, even as fuel prices in several cutting-edge economies rose steeply, by about 25% on average. Petrol prices in Germany and the United Kingdom have crossed the equivalent of roughly ₹220 and ₹204 per litre, respectively, while Hong Kong continues to record some of the world’s highest fuel prices at nearly ₹291 per litre. This stability is not a coincidence. It has been achieved through an extraordinary combination of state intervention, supply diversification, and financial absorption by general sector oil companies.

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