As Iran War Intensifies, India Moves to Protect Energy Supplies: Why Talks With the US for Shipping Risk Insurance Matter
India is stepping up efforts to secure its energy supply chain as the conflict in West Asia intensifies, with government officials confirming that the country is in discussions with the United States for risk insurance and financial guarantees for energy shipments moving through the Strait of Hormuz.
The move comes as escalating military tensions involving Iran, Israel and the United States threaten one of the world’s most critical oil transit routes. The Strait of Hormuz carries around 20% of global crude oil shipments and nearly half of India’s monthly oil imports, making it a strategic chokepoint for global energy trade.
Officials said India is coordinating with global partners and energy organizations to ensure uninterrupted fuel supplies while closely monitoring developments that could disrupt the flow of crude oil and liquefied natural gas (LNG).
“India has adequate crude oil and LPG supplies and is coordinating with international partners to manage risks to maritime trade and energy flows,” a senior government official said.
India Explores US Risk Insurance for Energy Shipments Passing Through the Strait of Hormuz
As tensions rise in West Asia, India has begun discussions with US authorities and the United States Development Finance Corporation (DFC) to secure political risk insurance and financial guarantees for ships transporting energy cargo through the Gulf region.
The discussions gained momentum after US President Donald Trump announced that the DFC would provide political risk insurance for maritime trade, particularly energy shipments passing through the Strait of Hormuz.
Trump said the US could even deploy naval escorts for tankers to ensure the uninterrupted movement of global energy supplies.
“If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz… the United States will ensure the free flow of energy to the world,” Trump said in a statement.
Such measures are critical for India, as disruptions in this strategic shipping route could significantly impact energy imports and domestic fuel supply.
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India Confirms Adequate Oil Reserves Despite Growing Regional Tensions
Government officials emphasized that India is currently in a comfortable position with sufficient crude oil reserves and refining capacity.
According to officials, the country has approximately 50 days of crude oil and refined product reserves, which can help cushion short-term supply disruptions.
Officials also reassured that domestic refineries currently have adequate stock levels.
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India has 50 days of crude oil and refined product reserves
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Domestic refineries have sufficient crude stocks
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India continues to import oil from multiple global suppliers
“All our refineries have enough crude oil stocks,” a government official said.
This reserve buffer provides the government with time to respond to any disruptions in global supply chains.
Qatar LNG Halt Emerges as the Biggest Energy Concern for India
While crude oil supplies remain stable for now, officials said the main concern lies in the disruption of liquefied natural gas (LNG) supplies from Qatar.
The issue emerged after QatarEnergy halted LNG production at its Ras Laffan facility following an Iranian drone strike on March 2.
The facility plays a crucial role in the global energy market, as Qatar accounts for about 25% of global LNG supply.
“Our main concern is shutting Qatar’s LNG production facility because 25% of global LNG supply comes from Qatar,” an official said.
The disruption has already triggered supply challenges for India.
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Petronet LNG, India’s largest LNG importer, has invoked force majeure
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GAIL India has also invoked force majeure due to supply disruptions
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Insurance companies have withdrawn coverage from key Middle East shipping routes
These developments have slowed shipments passing through the Strait of Hormuz.
Gas Supply Challenges Could Trigger Sector-Wise Allocation Changes
India currently consumes around 195 Million Standard Cubic Meters per Day (MMSCMD) of natural gas.
However, the government estimates that around 60 MMSCMD of supply is currently unavailable due to the combined impact of the Qatar LNG shutdown and disruptions in the Strait of Hormuz.
To manage the situation, authorities are exploring several contingency measures:
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Reprioritizing gas allocation among industrial sectors
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Increasing reliance on alternative fuels
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Diversifying LNG sourcing from global suppliers
Officials emphasized that such measures would ensure that essential industries continue to receive adequate energy supplies.
“Any deficit in gas supply will be managed in a manner that no one is at inconvenience,” government sources said.
India Diversifying Global Energy Supply Sources to Reduce Risk
Alongside emergency measures, India is actively diversifying its energy sourcing strategy to reduce dependence on any single region.
Officials confirmed that India is negotiating with multiple global partners and energy suppliers to ensure uninterrupted imports.
Key actions include:
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Engaging with global trading houses such as Trafigura and Vitol
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Coordinating with organizations such as the International Energy Agency (IEA) and OPEC
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Expanding partnerships with multiple oil-producing nations
India also continues to import crude oil from Russia, although the volume of imports declined slightly in February.
“India is negotiating with a large number of partners all over the world,” an official said.
Here’s What Happened Today and Why Traders Reacted
The escalating conflict in West Asia has created ripple effects across global energy markets and financial systems.
Key developments influencing markets include:
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Military conflict involving Iran, Israel and the United States
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Disruptions to shipping routes in the Strait of Hormuz
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Halt in LNG production at Qatar’s Ras Laffan facility
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Withdrawal of insurance coverage for some Middle East shipping routes
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India exploring US-backed risk insurance for maritime energy trade
These developments have raised concerns about energy supply disruptions, leading to increased volatility in oil prices and currency markets.
What the West Asia Conflict Means for Markets and Investors
The evolving geopolitical situation could have significant implications for both markets and investors.
Rising crude oil prices could affect multiple sectors:
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Oil marketing companies may face margin pressure
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Aviation and logistics companies could see higher fuel costs
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Inflation risks may increase if energy prices remain elevated
However, energy producers and upstream companies may benefit from higher oil prices.
Investors are therefore closely monitoring developments in the region, as changes in energy supply dynamics can quickly influence stock markets, currency movements and inflation expectations.
Outlook: Energy Security Remains a Strategic Priority for India
Despite the current geopolitical risks, government officials remain confident that India has the resources and partnerships needed to manage potential disruptions.
With adequate reserves, diversified supply channels and ongoing negotiations with international partners, the country is taking proactive steps to safeguard its energy security.
As the situation in West Asia continues to evolve, India will likely intensify diplomatic and strategic engagement with global energy suppliers to ensure that domestic fuel demand remains fully met.
