India scrambles for alternatives as Hormuz blockade cuts 13 million bpd from global supply

India scrambles for alternatives as Hormuz blockade cuts 13 million bpd from global supply The Strait of Hormuz crisis forces New Delhi to confront its reliance on Middle East crude as alternatives narrow. India’s prime minister Narendra Modi has ordered an urgent push into alternative energy sources, including biogas to replace liquefied petroleum gas, as the Strait of Hormuz blockade cuts deep into the country’s oil supplies.⁸ The directive, reported on Friday (2026-05-22), signals how the world’s third-largest oil consumer is being forced to rethink its energy mix after the waterway that carried roughly 20% of global oil shipments before the war was effectively shut to commercial traffic.³ The scale of the disruption is staggering. Fatih Birol, head of the International Energy Agency, told CNBC on Wednesday (2026-05-20) that 13 million barrels per day of oil have been lost from global supply, calling it “the biggest energy security threat in history.”² Iranian attacks on March 18 destroyed between 30% and 40% of Gulf refining capacity, cutting an estimated 11 million barrels per day of processed products from global markets.⁴ India is acutely exposed. Unlike Europe, which can lean on Norwegian and North Sea flows, or the United States with its own shale production, India imports roughly 85% of its crude needs, much of it from Middle East suppliers that now lack a functioning export route. Beijing has the advantage of buying about 90% of Iran’s sanctioned crude directly, giving China a dedicated pipeline alternative the Strait of Hormuz crisis does not threaten.⁵ New Delhi has no such bilateral channel. The crisis has scrambled price assumptions. ICE Brent crude front-month briefly touched $90 a barrel on April 17 after Iran’s foreign minister declared the Strait “completely open,” only to fall 10% that same day before rising 5% the next trading session.⁷ The volatility exposed how little traders trust any political signal. At Friday’s close (2026-06-12), Brent sat at $86.80, a level that still embeds a chunky risk premium but reflects no resolution in sight. [LIVE PRICES] The US approach has added complications. Donald Trump imposed a unilateral blockade on traffic to and from Iranian ports on April 13, hoping economic pressure would force Tehran to open the strait where bombing had not succeeded. [REFERENCE LEDE 2] Analysts at Montel described the global energy market as “fragile, uncertain” even after a US ceasefire extension was announced, with the Iranian military still seizing vessels inside the waterway.¹ For India, the path forward is narrow. The IEA’s coordinated release of 400 million barrels from emergency stockpiles helped stabilise prices in March, but those barrels are finite and Europe’s jet fuel needs alone consume a huge share — Europe got 75% of its jet fuel from Middle East refineries before the war, and that supply is now essentially zero.² “The $110 trillion global economy can be taken hostage by a couple of hundred men with guns across a 50-kilometer stretch of strait,” one analyst told CNBC.³ US-India energy cooperation is being discussed in Washington as a strategic hedge, with the US Strategic Petroleum Reserve positioned as a potential backstop for allied buyers. But the logistics of shipping SPR crude to Indian refiners at a time when Atlantic Basin tanker rates are spiking would test any arrangement. Birol warned that coal use may also rise in big Asian countries, underscoring how the Hormuz crisis could stall progress on emissions.² The unresolved question is what happens next. The Oxford Institute for Energy Studies warned that European leaders need to engage “seriously enough, and soon enough” with their own energy dependencies.⁶ For India, the timeline is even shorter. With the Strait still closed and no ceasefire durable enough to let commercial shipping resume, Modi’s biogas directive looks less like a long-term plan and more like a hedge against the immediate risk that a country with no domestic oil reserves and no spare Middle East pipeline capacity may soon have no choice but to bid for every non-Hormuz barrel it can find.