Oil Price Remains High as Attacks Continue, India Navigates the Energy Crisis Amid West Asia War
Crude oil prices remained elevated around $100 per barrel on Tuesday as US-Israeli attacks on Iran continued, despite US President Donald Trump’s announcement of a five-day pause on strikes. Benchmark Brent crude prices rose 3 per cent to $98.57 per barrel at 5pm IST, compared to $95.96 per barrel on March 23. The pause, intended to signal a possible de-escalation, has done little to calm markets that remain deeply uncertain about the duration and trajectory of the conflict. The war is now in its fourth week, and the supply disruptions that began with Iran’s closure of the Strait of Hormuz show no signs of abating.
In the midst of this volatility, the Indian government has been forced to deny reports that it is paying Iran for the safe passage of its tankers through the Strait of Hormuz. “Strait of Hormuz is international waters. There is no levy or fee for passing it. Any such report is baseless,” said Rajesh Kumar Sinha, special secretary at the shipping ministry. The denial came amid persistent speculation that India, heavily dependent on energy imports from the region, had been forced to make informal payments to ensure the safety of its vessels.
The timing of the denial was significant. Two Indian-flagged liquefied petroleum gas (LPG) tankers, Pine Gas and Jag Vasant, successfully transited the Strait of Hormuz on March 23 and are now headed to Indian shores. Pine Gas, carrying about 45,000 MT of LPG, is bound for New Mangalore port with an estimated arrival of March 27. Jag Vasant, carrying about 47,612.59 MT of LPG, is bound for Kandla port with an estimated arrival of March 26. Their safe passage was a relief to a country facing acute LPG shortages. But 20 Indian-flagged vessels with around 540 Indian seafarers remain in the western Persian Gulf region, the government said, underscoring the ongoing risk to shipping.
The LPG shortage has become a pressing domestic issue. With global prices soaring and supply chains disrupted, the government has been forced to prioritize household needs over industrial use. The result has been visible in reports of small eateries closing, workers returning to villages, and a black market for LPG cylinders emerging. In response, the government has urged users to switch to piped natural gas (PNG) by offering incentives such as free gas worth ₹500. Over 7,500 domestic and commercial PNG connections were issued or activated on March 23 in 110 geographical areas. But this is a long-term solution to a short-term crisis. The immediate need is to secure enough LPG to keep the nation’s kitchens running.
The government has said that India’s LPG supplies remain concerning, but that the country has secured some gas cargoes to ease the situation. Sujata Sharma, joint secretary at the Ministry of Petroleum and Natural Gas, acknowledged the challenge but expressed confidence that the worst could be managed. The problem, however, is not just about securing cargoes; it is about the cost. Higher oil prices translate directly into higher import bills, wider current account deficits, and pressure on the rupee. For a country that imports 85 per cent of its crude oil requirements, the impact is immediate and severe.
Prime Minister Narendra Modi, in a statement in the Rajya Sabha, said the war in West Asia is a cause of concern, and that India wants peace in the region through dialogue and diplomacy. The statement was a reiteration of India’s long-standing position of strategic autonomy, of not aligning itself with either side in conflicts that do not directly threaten its core interests. But the reality is that the war has directly threatened India’s core interests. Energy security is national security, and the disruption of supplies from the Gulf has exposed India’s vulnerability as no other event in recent memory.
The government’s response has been multi-pronged: securing safe passage for vessels, denying reports of payments to Iran, promoting PNG as an alternative to LPG, and diversifying sources of supply. But these are all reactive measures. The underlying problem—India’s dependence on imported energy—remains unaddressed. The 12 years of relatively benign oil prices under the Modi government were a golden opportunity to reduce that dependence. Instead, domestic crude oil output has fallen, and import dependence has risen from 84 per cent in 2014-15 to 90 per cent today.
The current crisis is a stress test for India’s energy security. It is also a test of the government’s ability to manage a complex emergency without resorting to panic or ad hoc measures. The denial of payments to Iran, for example, was necessary to preserve India’s reputation as a sovereign nation that does not bow to pressure. But it is also true that India’s vessels are transiting the Strait of Hormuz at a time when Iran has declared that US and allied vessels will not be allowed peaceful passage. The safe passage of Indian vessels suggests that Iran distinguishes between India and its Western allies, a distinction that reflects the long-standing diplomatic ties between the two countries.
The crisis has also highlighted the importance of the Strait of Hormuz. Through this narrow waterway passes a fifth of the world’s oil. Its closure by Iran, and the subsequent disruption of global energy markets, has demonstrated the power of asymmetric warfare. A country with a fraction of the military might of the United States can, by controlling a chokepoint, inflict immense pain on the global economy. For India, which has always prioritized multilateralism and a rules-based global order, the lesson is stark: rules are only as strong as the power that enforces them.
The coming weeks will be critical. The five-day pause announced by Trump is a pause, not a peace. The war could resume at any moment. The global oil market remains on edge. And India, with its vast population and its dependence on imported energy, remains vulnerable. The government has said it is trying to procure gas and crude oil from all available sources. But there is only so much that can be procured. The real solution lies not in finding more sources of supply, but in reducing demand. That means accelerating the transition to renewable energy, promoting public transport, and incentivizing energy efficiency. It means treating energy security as a long-term strategic goal, not a short-term crisis to be managed.
In the meantime, the Indian government will continue to monitor the situation, to deny rumors, to secure cargoes, and to urge citizens to switch to PNG. It will continue to hope for a diplomatic resolution to the war, and to prepare for the worst. The resilience of the Indian economy has been tested before, and it has survived. But each crisis leaves a scar, and the scars of this crisis will be visible in higher prices, lower growth, and a reminder of the fragility of the global system on which India’s prosperity depends.
Questions and Answers
Q1: What is the current status of crude oil prices, and what is causing the volatility?
A1: Crude oil prices remain elevated around $100 per barrel. Benchmark Brent crude rose 3 per cent to $98.57 per barrel on March 24. The volatility is caused by the ongoing US-Israeli attacks on Iran and the disruption of supplies through the Strait of Hormuz, despite a five-day pause announced by President Trump.
Q2: Did the Indian government pay Iran for safe passage of its tankers through the Strait of Hormuz?
A2: No. The Indian government has strongly denied reports that it paid Iran for safe passage. Special Secretary Rajesh Kumar Sinha stated, “Strait of Hormuz is international waters. There is no levy or fee for passing it. Any such report is baseless.”
Q3: What is the status of Indian vessels in the Persian Gulf region?
A3: Two Indian-flagged LPG tankers, Pine Gas and Jag Vasant, successfully transited the Strait on March 23 and are headed to Indian shores. However, 20 Indian-flagged vessels with approximately 540 Indian seafarers remain in the western Persian Gulf region, underscoring the ongoing risks to shipping.
Q4: What measures is the Indian government taking to address LPG shortages?
A4: The government is taking several measures:
-
Urging users to switch to piped natural gas (PNG) by offering incentives such as free gas worth ₹500.
-
Over 7,500 domestic and commercial PNG connections were issued or activated on March 23.
-
The government has secured some gas cargoes to ease the situation, though LPG supplies remain concerning.
Q5: What is Prime Minister Modi’s stated position on the West Asia war?
A5: In a statement in the Rajya Sabha, Prime Minister Modi said the war in West Asia is a cause of concern, and that India wants peace in the region through “dialogue and diplomacy.” This reiterates India’s long-standing position of strategic autonomy and its preference for peaceful resolution of conflicts.
