30 Jul Red Sea Crisis and India’s Crude Oil Security

How the Expanding West Asia Conflict Could Reshape India’s Energy Strategy

GS Papers Covered

• GS Paper II: International Relations (West Asia, India-Middle East Relations)
• GS Paper III: Indian Economy (Energy Security, Petroleum Imports)
• Prelims: Geography, Economy, International Organizations, Current Affairs
• Essay: Energy Security | Geopolitics | India’s Strategic Autonomy

Why is this in News?

The conflict in West Asia has expanded beyond the Strait of Hormuz to the Red Sea, where Yemen’s Houthi rebels have threatened Saudi-linked oil shipments through the Bab-el-Mandeb Strait.

Although Russian crude exports to India remain largely unaffected, prolonged disruption in the Red Sea could threaten global oil supplies, increase freight costs, and raise India’s import bill.

The development has renewed concerns over India’s energy security, as nearly 88% of India’s crude oil requirement is imported.

At a Glance (Important Facts for Prelims)

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Understanding the Issue

How does oil normally reach India?

Crude oil from Russia and West Asia generally follows this route:

Black Sea → Bosporus → Dardanelles → Mediterranean Sea → Suez Canal → Red Sea → Bab-el-Mandeb → Arabian Sea → India

However, attacks near Bab-el-Mandeb may force ships to travel around the Cape of Good Hope, increasing both time and transportation costs.

Why is Bab-el-Mandeb Important?

The Bab-el-Mandeb Strait connects the Red Sea with the Gulf of Aden.

Significance

• Connects Europe and Asia through the Suez Canal.
• One of the world’s busiest maritime trade routes.
• Critical for global energy transportation.
• Essential for India’s crude imports from West Asia.

Any disruption affects shipping costs, insurance premiums and global crude prices.

1. Strait of Hormuz

• Connects Persian Gulf with Gulf of Oman.
• Around one-fifth of globally traded oil passes through it.

2. Bab-el-Mandeb

• Connects Red Sea with Gulf of Aden.
• Critical for Europe-Asia shipping.

3. Suez Canal

• Shortest sea route between Europe and Asia.

4. Bosporus & Dardanelles

• Important exit route for Russian Black Sea oil.

Why Russian Oil is Important for India

After the Ukraine conflict, Russia offered crude oil at discounted prices.

Consequently,

• Russia became India’s largest oil supplier.
• Indian refiners earned higher refining margins.
• Inflationary pressure remained under control.
• Energy diversification improved.

Moreover, Russia now accounts for more than half of India’s crude imports in several recent months.

Why India is Relatively Safe—for Now

Despite the Red Sea tensions, analysts believe immediate disruption is limited because:

• Russian exports are still moving.
• India has diversified suppliers.
• Saudi Arabia can partly use pipelines.
• Indian refiners maintain commercial inventories.
• Strategic Petroleum Reserves provide short-term support.

Nevertheless, prolonged conflict could gradually increase costs.

Challenges Before India

1. Rising Freight Costs

Ships may have to avoid the Red Sea, increasing travel distance by nearly two weeks.

2. Higher Insurance Premiums

War-risk insurance significantly raises transportation costs.

3. Imported Inflation

Higher crude prices eventually increase:

• Petrol
• Diesel
• LPG
• Fertilizer costs
• Transport costs

4. Fiscal Pressure

Subsidies may increase while the current account deficit could widen.

5. Supply Chain Disruptions

Longer shipping routes delay cargo movement and affect refinery planning.

India’s Response

Diversifying Import Sources

India is increasing purchases from:

• Russia
• USA
• Brazil
• Guyana
• UAE
• Iraq

Strategic Petroleum Reserve (SPR)

India has established underground reserves at:

• Visakhapatnam
• Mangaluru
• Padur

These reserves help during emergencies.

Energy Diplomacy

India continues balanced relations with:

• Gulf countries
• Russia
• United States

This strategic autonomy reduces dependence on any single supplier.

Renewable Energy Expansion

Long-term energy security also depends upon:

• Solar Mission
• Green Hydrogen Mission
• Biofuels
• Electric Mobility

Significance of this News

This development is important because it highlights the growing link between geopolitics and energy security.

Furthermore, the crisis demonstrates how maritime chokepoints influence global trade and domestic inflation.

For India, uninterrupted crude imports are essential for sustaining economic growth, maintaining inflation control, and ensuring energy availability.

Way Forward

India should continue diversifying crude imports while strengthening domestic energy resilience.

Meanwhile, expanding Strategic Petroleum Reserves and renewable energy capacity can reduce vulnerability to external shocks.

Additionally, stronger maritime cooperation in the Indian Ocean Region and sustained diplomatic engagement in West Asia will help safeguard India’s long-term energy interests.

Ultimately, the present crisis underlines that energy security is not merely an economic concern but also a strategic imperative.

UPSC Prelims Practice Questions

Q1.With reference to the Bab-el-Mandeb Strait, consider the following statements:

1. It connects the Red Sea with the Gulf of Aden.
2. It lies between Yemen and Djibouti/Eritrea.
3. It connects the Persian Gulf directly with the Arabian Sea.

Which of the statements given above is/are correct?

(a) 1 only

(b) 1 and 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

Answer(b)

Explanation

• Statement 1 is correct.
• Statement 2 is correct.
• Statement 3 is incorrect because the Strait of Hormuz, not Bab-el-Mandeb, connects the Persian Gulf with the Arabian Sea.

Q2.Which one of the following best explains the importance of the Strategic Petroleum Reserve (SPR)?

(a) It is maintained to regulate international crude oil prices.

(b) It helps India export petroleum products.

(c) It provides emergency crude oil reserves during supply disruptions.

(d) It stores refined petroleum products for commercial sale.

Answer

(c)Explanation

Strategic Petroleum Reserves are emergency crude oil storage facilities created to ensure energy security during wars, natural disasters, or major disruptions in global oil supply chains.

UPSC Mains Question (15 Marks)

“The security of maritime chokepoints has become central to India’s energy security in an increasingly unstable geopolitical environment.” Discuss with reference to the Red Sea crisis and India’s crude oil import strategy. (250 words)