Ceasefire averts Hormuz crisis, but what are the learnings?

The June 2025 crisis in the Strait of Hormuz—sparked by heightened tensions between Iran and the West—was a sobering reminder of how vulnerable global trade and energy flows remain to geopolitical flashpoints. For India, a nation that imports nearly 90% of its crude oil and a substantial share of its LNG through this narrow maritime chokepoint, the risks are particularly acute. Although a ceasefire has temporarily stabilized markets and eased price pressures, the episode underscores a pressing imperative: India must urgently diversify its trade and energy supply routes to safeguard its economic stability and strategic autonomy.

This article assesses the strategic vulnerabilities exposed by the crisis, India’s progress in supply diversification, and the roadmap needed to future-proof the nation’s energy and trade architecture. The message is clear: resilience in today’s global economy requires not just access to resources, but the foresight to secure them through a web of diversified, stable, and strategically protected corridors.

The Strait of Hormuz, a 33-kilometer-wide maritime corridor connecting the Persian Gulf to the Arabian Sea, is a linchpin of global energy trade, channeling approximately 20% of the world’s oil (17-20 million barrels per day) and 20-30% of liquefied natural gas (LNG) shipments. For India, the world’s third-largest oil importer, this strait facilitates about 40% of its crude oil imports (2 million barrels per day [bpd] out of 5.5 million bpd) and a significant portion of its LNG and non-energy trade. Iran’s recent parliamentary motion to consider closing the Strait, prompted by US airstrikes on its nuclear facilities in June 2025, had raised alarms about disruptions to India’s energy security and trade.

However, recent diplomatic breakthroughs— including a phased ceasefire agreement between Iran and Israel—have eased tensions and brought temporary relief. Oil prices, which had surged past US$ 80 per barrel at the peak of the crisis, began falling toward the mid-60s after the ceasefire was confirmed. Although this resolution has temporarily calmed global markets, the crisis underscores a hard truth: India must future-proof its trade and energy supply chains against the geopolitical volatility of chokepoints like the Strait of Hormuz.

India’s energy dependency and the Strait’s role

India’s energy security is critically shaped by its dependence on imported crude oil. In 2023–24, the country imported 232 million tonnes of crude (about 5.5 million bpd), with an import dependency rate of 88–90%. According to the Department of Commerce’s Export Import Data Bank, crude oil imports alone were valued at US$ 132.4 billion in FY 2023–24. Key suppliers include Iraq (US$ 31.2 billion), Saudi Arabia (US$ 22.7 billion), UAE (US$ 13.9 billion), and Kuwait (US$ 7.8 billion)—all of which primarily export through the Strait of Hormuz. Vortexa data indicates that Persian Gulf nations supplied 51% of India’s crude oil imports in 2024, rising to 53.9% in May 2025.

In 2024–25, Russia emerged as India’s largest crude supplier, accounting for over 35% of the total intake. In January 2025 alone, India imported 1.76 million barrels per day (bpd) from Russia, a sharp rise from near-zero levels before the Ukraine crisis. Meanwhile, the share of OPEC producers fell to 48-51.5%, and US crude oil exports to India surged to 439,000 bpd by mid-2025.This shift implies that now less than 40% of India’s oil imports pass through the Strait of Hormuz—a significant drop compared to past levels.

Trade data from the Department of Commerce further illustrates the scale of exposure. India’s overall imports in FY 2023–24 were US$ 853.8 billion, down from US$ 898 billion in the previous fiscal year. Crude oil made up approximately 20-21% of total imports. Even a moderate price hike of US$ 10–15/barrel could inflate the oil bill by US$ 17-26 billion annually, potentially widening the trade deficit (currently around US$ 75 billion) and triggering currency depreciation. The rupee, inflation, and India’s sovereign credit profile would all be impacted in such a scenario.

Why India feels “safer”—but not immune

Union Petroleum Minister Hardeep Singh Puri recently emphasized that India is “safe” from any potential Strait of Hormuz closure due to its “diversified energy basket.” This assessment is not without merit.

1. Supply diversification: India now imports oil from over 30 countries, including Russia, Brazil, the United States, and African nations. This reduces its reliance on Persian Gulf routes.
2. Strategic petroleum reserves (SPR): India has built up emergency reserves in Visakhapatnam, Mangaluru, and Padur, providing 5–6 days of consumption cover with commercial stockpiles by oil marketing companies adding weeks of cushion.
3. Export moderation capability: India is a net exporter of refined petroleum products, shipping 2–1.3 million bpd. In times of crisis, it can prioritize domestic allocation by moderating exports.
4. Infrastructure readiness: The Ministry of Commerce and the Ministry of Petroleum are closely monitoring logistics, shipping insurance, and costs. Indian ports have been upgraded to handle diverse supplier routes, including from Africa and the Americas.

Nonetheless, approximately 40% of oil still comes through the Strait, making India still vulnerable to even partial disruptions.

What India should do going forward

While the ceasefire offers a reprieve, it should not breed complacency. India must use this strategic pause to accelerate long-term resilience measures. Key priorities include:

• Expand strategic petroleum reserves to cover 30-45 days of consumption, providing a crucial buffer during supply shocks.
• Sign more long-term crude import contracts with alternative suppliers such as Brazil, the United States, and CIS countries to reduce overdependence on Persian Gulf routes.
• Strengthen energy diplomacy through platforms like the International Solar Alliance, BRICS, and I2U2 to forge stable, long-term partnerships.
• Accelerate investments in renewable energy and deep-water oil exploration projects led by ONGC will build long-term energy independence.
• Enhance logistics infrastructure by improving refinery efficiency, shipping capacity, and inland distribution systems.

Conclusion

The June 2025 ceasefire may have temporarily stabilized the region, but the threat of future disruptions to the Strait of Hormuz remains real. India has made substantial progress in diversifying its crude imports and enhancing strategic stockpiles, yet 40% of its energy imports continue to rely on a single vulnerable chokepoint.

The crisis served as a critical reminder that energy security is not just about supply contracts—it is equally about diplomatic agility, infrastructural preparedness, and strategic foresight. As geopolitical uncertainties persist, India must stay the course on energy diversification and trade route security to ensure that temporary shocks do not evolve into lasting economic disruptions.