Attacks on UAE vessels raise risks for Indian crude imports. But LPG, LNG supplies far more vulnerable
A tanker operated by the UAE's national oil company was struck by a missile while transiting the Strait of Hormuz; the company reported 15 of its vessels had been attacked by missiles or drones since a wider regional conflict began, including three in a single week
A separate drone strike hit a refinery on the Saudi Arabian coast, claimed by Yemen's Houthi movement
India faces limited immediate risk to crude supply due to diversified sourcing across more than 40 countries, but war-risk insurance premiums on Gulf voyages have risen sharply, adding to landed fuel costs
LPG and LNG imports are assessed as far more exposed than crude, since India sources the bulk of these fuels from the Middle East with few alternative routes or suppliers
The Strait of Hormuz as a Global Energy Chokepoint
The Strait of Hormuz, separating Iran from Oman and the UAE, is the world's most important oil chokepoint, connecting Persian Gulf producers (Saudi Arabia, Iran, Iraq, UAE, Kuwait, Qatar) to open seas. Roughly a fifth of global oil consumption transits the strait, making any disruption there a systemic risk to global energy prices, not just to countries with direct trade links.
Key Details
- India has historically routed 40-45% of its crude oil imports through the Strait of Hormuz; this share fluctuated further amid recent regional disruptions
- Alternative routes bypassing the strait are limited: Saudi Arabia's East-West pipeline and the UAE's Habshan-Fujairah pipeline can partially bypass it, but LNG and LPG cargoes generally cannot
- The IEA and India's Petroleum Ministry monitor strait-transit dependency as a key energy-security metric, given the absence of viable alternative sea routes for large volumes
- The strait is a key case study in the "chokepoint" concept in strategic geography, alongside the Strait of Malacca, Bab-el-Mandeb, and the Suez Canal
The reported missile strike on a tanker inside the Strait of Hormuz directly implicates the chokepoint India relies on for a large share of its crude imports, reinforcing why disruption risk there receives close policy attention.
War-Risk Insurance and Freight Cost Transmission
War-risk insurance is a specialised marine insurance cover (distinct from standard hull and cargo insurance) that shipowners must purchase for transit through officially designated high-risk zones. Premiums are quoted as a percentage of a vessel's insured value and can rise sharply within days when attacks escalate, since underwriters reprice risk in near-real time.
Key Details
- War-risk premiums on affected Gulf/Red Sea routes have risen from a baseline of roughly 0.25-0.3% of vessel value to as high as 7.5-10% on some voyages during the recent escalation, according to industry reporting
- Even a one-percentage-point rise in premium can add hundreds of thousands of dollars to the cost of a single tanker voyage, a cost typically passed through to landed fuel prices
- Higher freight and insurance costs act as an indirect inflationary channel even when physical supply is not interrupted, distinguishing "supply risk" from "cost risk" in energy security assessments
The article's central point — that India may avoid a physical supply crunch but still face higher costs — turns on this insurance-and-freight transmission mechanism rather than on outright unavailability of crude.
India's LPG and LNG Import Dependence
Unlike crude oil, which India sources from a wide and diversifying supplier base, LPG (used mainly for cooking gas under schemes like PMUY) and LNG (used for power, fertiliser and city gas) are heavily concentrated on Middle Eastern suppliers, with far fewer alternative long-term contracts or pipeline options.
Key Details
- India imports close to 60% of its total LPG requirement, with roughly 90% of LPG imports sourced from the Middle East
- Roughly half of India's LNG imports also originate from the Middle East (principally Qatar, under long-term contracts, alongside spot cargoes)
- LPG subsidised distribution under the Pradhan Mantri Ujjwala Yojana (PMUY, launched 2016) makes cooking-gas price stability a politically and socially sensitive supply-chain concern
- LNG is imported in liquefied form via dedicated regasification terminals (e.g., Dahej, Hazira, Kochi), meaning supply disruption cannot be easily substituted by pipeline gas in the short term
The article's assessment that LPG and LNG are "far more vulnerable" than crude follows directly from this supplier concentration — India has diversified crude sourcing over the past decade but has not achieved comparable diversification for LPG and LNG.
- Reported attacks on UAE national oil company vessels since the regional conflict began: 15 vessels, including 3 in one week (as of the report)
- Strait of Hormuz share of India's crude imports: historically 40-45%
- UAE share of India's crude imports (July): approximately 470,000 barrels/day, about 10% of imports, second-largest supplier after Russia
- India's crude import diversification: sourced from 41 countries
- War-risk insurance premium rise: from about 0.25-0.3% to as high as 7.5-10% of vessel value on affected routes
- India's LPG import dependence: nearly 60% of domestic requirement imported, about 90% of that from the Middle East
- India's LNG import share from the Middle East: approximately 50%