West Asia Conflict Disrupts India's Oil and Gas Supplies
The hydrocarbon sector in India has been severely impacted by the ongoing conflict in West Asia. The war, which began in February 2026, has disrupted maritime traffic through the Strait of Hormuz, affecting oil and gas supplies. According to ICRA Limited's Prashant Vasisht, the strait allows passage for almost 20 per cent of global oil supplies and traded liquefied natural gas (LNG). The conflict has resulted in significant stock drawdowns amid West Asia-related supply disruptions.
The Strait of Hormuz disruption is expected to reduce OPEC output to 18.4 million barrels per day (mbd) in 2026 from 25.5 mbd in 2025, with non-OPEC production projected to increase to 66.6 mbd from 63.4 mbd. The Indian oil and gas sector has been heavily impacted by the country's reliance on West Asia for sourcing both crude oil and LNG. In FY 2025, about 50 per cent of India's crude oil and 54 per cent of LNG imports were routed through the Strait of Hormuz.
India's purchase of crude oil from Russia has surged due to waivers given by the US. The Ministry of Petroleum and Natural Gas (MoPNG) approved the National Offshore Exploration Scheme, Samudra Manthan, with an outlay of Rs 840.84 billion for implementation through FY 2031, aiming to boost domestic oil and gas production.
Domestic refining capacity is expected to increase to 315 million tonnes over the next five years from 267.1 million tonnes as on March 31, 2026. The scheme will provide support for pipeline infrastructure connecting CBG plants with trunk pipelines and city gas distribution (CGD) networks.