India’s push for energy conservation is a refusal to be ‘extorted’ for Hormuz passage: govt sources
Amid a disruption to the Strait of Hormuz passage for tanker traffic, government sources described India's domestic energy conservation push as a refusal to pay what they termed an "unofficial toll" of up to $2 million per vessel for safe transit through the strait.
As of May 2026, approximately 70% of India's crude oil imports are being sourced from routes outside the Strait of Hormuz, compared with roughly 55% earlier — reflecting a significant supply diversification achieved over recent months.
The government issued a Natural Gas Control Order on 9 March 2026 under the Essential Commodities Act, and directed refineries and petrochemical complexes to maximise LPG production, resulting in domestic LPG output rising by about 25%.
A 24×7 control room has been set up to monitor petroleum stocks and fuel availability.
A full customs duty exemption was introduced on selected critical petrochemical products until 30 June 2026 to ease supply-chain pressure.
India now imports crude oil from approximately 40 countries, compared with a narrower basket prior to 2022.
The Strait of Hormuz: Strategic Geography
The Strait of Hormuz is a narrow waterway between Iran and Oman, connecting the Persian Gulf to the Gulf of Oman and Arabian Sea. It is the world's most critical oil chokepoint: historically, around 20% of global petroleum liquids — and roughly 30% of globally traded LNG — transit through it daily.
With Hormuz passage disrupted by the Iran–regional conflict context in early 2026, India's dual response — demand-side conservation and supply-side diversification to non-Hormuz routes — is a direct operationalisation of energy security strategy.
India's Essential Commodities Act, 1955
The Essential Commodities Act, 1955 empowers the central government to regulate the production, supply, and distribution of essential commodities in the interest of public welfare. Petroleum products, LPG, and natural gas fall within its ambit, allowing the government to issue control orders to direct industrial behaviour in emergencies.
Key Details
- The Natural Gas Control Order issued on 9 March 2026 was passed under this Act.
- The Act gives the Centre overriding powers over production priorities, enabling the directive to refineries to maximise LPG output.
The government's regulatory response to the Hormuz crisis demonstrates the Essential Commodities Act functioning as an emergency energy management tool — relevant for understanding how India's domestic legal framework interacts with external supply shocks.
Energy Security: Concept and India's Framework
Energy security, as defined by the International Energy Agency (IEA), encompasses uninterrupted availability of energy sources at an affordable price. India's approach rests on four pillars: availability, accessibility, affordability, and acceptability (sustainability).
The conservation drive is the demand-side complement to SPR drawdown and supply diversification — together constituting India's multi-layered response to an acute supply shock.
CBDR-RC and Energy Transition Context
While this article is primarily about energy security under duress, India consistently frames its energy choices within the principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC) under the UNFCCC. India argues that its right to affordable fossil fuel imports is part of its development entitlement, while simultaneously accelerating renewable deployment under its updated NDC (500 GW non-fossil capacity by 2030).
India's conservation messaging domestically is framed not as climate sacrifice but as strategic self-reliance — a distinction with implications for both energy diplomacy and NDC progress tracking.
- Unofficial toll for Hormuz transit (reported): up to $2 million per vessel
- India's crude oil import dependence: ~85–87% of total consumption
- India's share of Hormuz crude flows: ~14.7% (second-largest nationally, after China)
- Crude imports now sourced outside Hormuz: ~70% (up from ~55% earlier)
- Number of crude oil source countries: ~40
- LPG production increase under government directive: ~25%
- Natural Gas Control Order: issued 9 March 2026 under the Essential Commodities Act, 1955
- Customs duty exemption on critical petrochemicals: until 30 June 2026
- CAD impact of $10/barrel crude price rise: 40–50 basis points of GDP
- India's SPR capacity: ~5.33 MMT (~9.5 days of consumption cover)
- India's current account deficit (Q1 FY2025–26): 0.2% of GDP (down from 0.9% a year prior)