Bab el-Mandeb Tensions Threaten India's Oil Supply

India's energy security is under threat due to growing tensions around the Bab el-Mandeb Strait, which handles nearly 6-7 million barrels a day of crude. The strait is an alternative route to the Iran-blocked Strait of Hormuz and has been used by vessels transporting Saudi and Russian crude.

Analysts warn that disruptions to Saudi crude through the Red Sea chokepoint put refinery operations, crude availability, freight costs, and regional product supply at risk. According to Praveen Rai, director of Grant Thornton Bharat, a sustained disruption would force vessels to reroute around the Cape of Good Hope on the tip of Africa, adding around two weeks to the journey.

This would escalate landed crude costs due to increased bunker fuel consumption, higher charter rates, and surging war-risk insurance premiums. The effective supply chain for India would become less efficient, making it harder to secure oil supplies.