Middle East Crisis Pushes India's Oil Sector to Breaking Point

(MENAFN) A geopolitical shockwave originating in the Middle East is now battering India's energy sector from within, with state oil companies bleeding nearly $104.54 million daily — and a senior minister openly questioning how much longer the situation is tenable.

Oil Minister Hardeep Singh Puri delivered the frank assessment Tuesday at an industry forum in New Delhi, confirming that while domestic fuel supply chains remain intact, the financial damage accumulating beneath the surface is reaching critical levels.

"How long will the oil companies be able to take it? Frankly, that's something that worries me," said Puri, responding to a question.

New Delhi has shielded consumers from the full force of the global price surge, pointing to petroleum prices that have "held steady through this period of global volatility even after more than 70 days since the conflict started" — a distinction it says sets India apart from most nations. But that shield has come at a steep price: state oil marketing companies are absorbing losses of close to 10 billion Indian rupees ($104.54 million) daily, deliberately bearing the "burden of global astronomical prices is not passed to the Indian citizens."

The toll is historic in scale. While acknowledging periods "when the oil companies have done exceptionally well till recently," Puri delivered a sobering projection: "The rate at which we are going, this one quarter of losses may wipe out the entire profit after tax of last year."

With no immediate end in sight, Puri hinted that a policy reassessment may be unavoidable. "Coming back to the question, how long can this happen? At some stage, the government will have to take a view on that," he said.

India's vulnerability stems from its heavy reliance on Middle Eastern energy — the region supplies roughly half of the country's total energy imports, which were valued at $180 billion in 2024. In a bid to diversify, New Delhi last month quietly resumed oil purchases from Iran, ending a seven-year hiatus driven by earlier sanctions.

Strategic reserves currently stand at 60 days of crude oil, 60 days of natural gas, and 45 days of liquefied petroleum gas (LPG) — a buffer officials say provides near-term insulation. Prime Minister Narendra Modi reinforced the conservation message on Sunday, appealing directly to citizens to cut personal fuel use through practical steps such as working from home.

The current crisis traces back to February 28, when U.S. and Israeli strikes on Iran ignited a chain of retaliatory strikes from Tehran targeting Israel and Gulf-based American allies. The fallout has critically disrupted the Strait of Hormuz — the narrow maritime corridor handling around 20% of global oil shipments — sending energy markets into prolonged turmoil.

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