India may curb oil product exports, explore alternative routes amid threats of Hormuz Strait closure

In a move that could potentially disrupt global fuel markets, India may be quietly drawing up contingency plans amid rising tensions in the Middle East over an escalating Iran-Israel conflict. According to Union minister for Petroleum & Natural Gas, Hardeep Singh Puri, the Centre is considering reducing exports of refined petroleum products to ensure energy security at home as the strategically vital Strait of Hormuz is under threat.

“We are net exporters of petroleum products, but if required, we will prioritise domestic needs,” Puri told NDTV on Thursday. He added that India is also actively exploring alternative crude supply routes beyond the Persian Gulf to avoid short-term disruptions if geopolitical tensions worsen. If implemented, these decisions may create ripples in major fuel-importing nations, from Singapore to the U.S.

India is a major exporter of refined petroleum products. Nearly a third of the world’s seaborne oil passes through the Strait of Hormuz. Major refiners such as Reliance Industries Ltd and Nayara Energy ship fuels to countries, including the U.A.E., Singapore, Australia, and the U.S. via the strategic waterway. However, in a worst-case scenario involving the closure of Hormuz, these exports could be curtailed to maintain India's internal reserves.

The Centre’s contingency plans highlight the mounting risks global markets face as the crisis in the Middle East continues to escalate. According to Rahul Kalantri, vice president of commodities at Mehta Equities Ltd, “Crude oil remains highly volatile, with prices reacting sharply to any development related to the Israel-Iran conflict. We saw WTI crude briefly cross $75 a barrel before retreating on cooling rhetoric from the White House.”

Despite temporary pullbacks, oil prices remain elevated. The market has been buoyed by a surprise 10-million-barrel drop in U.S. inventories and persistent fear of a wider conflict. “Prices rebounded to nearly $74 per barrel amid rising concerns over potential U.S. involvement, with reports suggesting that senior U.S. officials are preparing for a possible strike on Iran,” noted a recent report from Kotak Securities’ commodity research team.

Kalantri also highlighted key trading levels. “Crude oil has support at $72.50-71.90 and resistance at $73.95-74.60. In INR terms, it’s supported at ₹6,250-6,170 and faces resistance at ₹6,420-6,490.”

For now, the government is keeping a close eye on the crisis. While no immediate disruptions have been reported, the potential impact on energy supply chains and domestic inflation has prompted preemptive measures.