The quiet diplomacy and the naval escort that India required to shepherd four of its gas tankers through the Strait of Hormuz in mid-March, suggest that oil and gas trades are no longer purely commercial—but increasingly resemble a zero-sum game to be won by any means necessary.
The vessels, carrying liquefied petroleum gas (LPG) widely used for cooking, were among 22 Indian-flagged ships stranded in the Persian Gulf, west of the Strait of Hormuz, after American and Israeli warplanes began bombing targets across Iran on February 28. Tehran launched retaliatory strikes and largely closed the strait. The 33 km-wide channel between Iran and its Gulf neighbours is the world’s most strategically indispensable maritime passage—a choke-point for a fifth of global oil and gas flows to markets in Asia, Europe and beyond (see ‘Energy choke-point’).
According to the UN Trade and Development (UNCTAD), in the week before the conflict the strait accounted for 35 per cent of global seaborne crude trade, 29 per cent of LPG and 19 per cent each of liquefied natural gas (LNG) and refined products. It also carried 13 per cent of global chemicals, including fertilisers. About 100 ships transit the strait every day. That traffic plunged by 97 per cent within days of the war’s onset, stranding some 3,000 ships and choking off flows of crude and LNG.
The conflict soon escalated into an energy war. On March 18, Israel struck the South Pars gasfield off Iran’s southern coast, the world’s largest natural gas reservoir. Within hours Iran retaliated with multiple missile strikes on Qatar’s Ras Laffan Industrial City, home to the world’s largest LNG export plant. The prices of oil and natural gas, already high, rose further as attacks on energy facilities intensified. The cost of everything from fertiliser to helium, a vital input in semiconductor manufacturing, also surged (see ‘Brunt of war’,).
By the second week of the war, oil prices had recorded their sharpest rise in years, climbing towards $120 a barrel on March 9, the highest since the immediate aftermath of Russia’s invasion of Ukraine in 2022. Prices briefly dipped around $90 ahead of the International Energy Agency’s decision on March 11 to release 400 million barrels from strategic reserves, including 172 million from the US—the largest coordinated drawdown on record and more than double the 2022 emergency release. Even so, Brent crude hovered around $100.5 on March 12, up roughly 9–10 per cent, reflecting persistent fears of disruption. As the war entered its fourth week, prices remained above $100. Analysts warn they could reach $150 if shipping remains constrained.
The death toll is mounting. By March 21, at least 3,230 Iranians had been killed, including 1,400 civilians, according to Human Rights Activists in Iran, a non-profit. Among them were 210 children. Casualties rose on all sides as the conflict spread across West Asia, including Lebanon.
Amid mixed signals from Washington and Tehran about possible talks to end the war, importing governments and firms have begun negotiating with Iran to secure passage for vessels through the strait.
The closure’s nastiest effects are felt in Asia, which buys almost 80 per cent of the 21 million barrels a day that transited Hormuz before the war. Four economies—China, India, Japan and South Korea—account for three-quarters of the oil and nearly 60 per cent of the LNG that passes through the choke-point. Poorer countries have been hit first. Nepal has rationed cooking gas. Sri Lanka has urged firms to shut on Wednesdays to conserve fuel. Pakistan, which sources almost all its LNG from Qatar, is among the most exposed: schools have closed and universities moved online.
In India, the shock has exposed a chronic weakness: heavy reliance on imported fossil fuels. The country imports 88–90 per cent of its crude, about half of it—2.5 million to 2.7 million barrels a day—via Hormuz, largely from Iraq, Saudi Arabia, the United Arab Emirates and Kuwait. Around 60 per cent of LPG consumption is imported, and roughly 90 per cent of that passes through the strait. Some 68 per cent of LNG supplies come from the Gulf, chiefly Qatar. Overall, imports account for nearly half of natural-gas consumption, with roughly a quarter of total supply now disrupted. The pain is felt most acutely in kitchens across the country.
Before the conflict, India’s 25,000 LPG distributors processed about 5.5 million cylinder bookings a day; within a fortnight that had surged to 8.8 million, driven by panic-buying. The government invoked the Essential Commodities Act of 1955—rarely used at scale outside wartime—and introduced four-tier rationing. Households and CNG vehicles received full supply; industrial and commercial users were cut to 50 per cent; fertiliser plants, critical for food security, to 70 per cent. In cities such as Mumbai, up to a fifth of restaurants shut temporarily. Morbi, Gujarat’s ceramics hub, was limited to 80 per cent of normal gas use. Fertiliser plants trimmed urea output just as the kharif sowing season approached. Waiting times for cylinders stretched to 25 days in cities and 45 in rural areas.
To stabilise supply, refineries have been told to maximise LPG output—lifting production by 38 per cent—while the government has scrambled to source cargoes from the US, Norway, Canada, Algeria and Russia. Officials insist supplies are adequate. The Reserve Bank of India in its March report urged “close monitoring” but says the economy is more resilient to external shocks than before. Seeking to accelerate the push for piped natural gas (PNG), the Ministry of Petroleum and Natural Gas, on March 24, invoking the Essential Commodities Act instituted reforms to ease provisions towards expanding piped gas network— both domestic and commercial. Analysts nonetheless warn that prolonged disruption will lift prices and dent growth. The bigger question now is duration. “If the disruption continues for two, three or four months, this becomes an enormous shock to everything in the global economy,” Apratim Sahay, co-director at the Net Zero Industrial Policy Lab at Johns Hopkins University, tells Down To Earth (DTE).
When conflict erupts in the Gulf, energy markets rarely remain calm. The disruption to global energy markets is already inviting comparisons with the oil shocks of the 1970s. Some analysts reckon it is approaching, and may even exceed, the scale of the largest supply disruptions in modern history. Rapidan Energy Group, an energy market, policy and geopolitical data and research firm in the US, has released its proprietary data and analysis on the impact of the war on global oil markets. It estimates that the disruption by the “Gulf War III”, has exceeded more than double the previous record set during the Suez Crisis of 1956-57, which disrupted just under 10 per cent of global oil supply. This is not merely a demand shock. It is a combined supply and buffer shock, hitting both production flows and the spare capacity that cushions the market. That cushion has all but disappeared, it states. Saudi Arabia and the United Arab Emirates, the main holders of spare capacity, have effectively been cut off from global markets. During Suez crisis, spare capacity amounted to 35 per cent of global supply and was largely located in the US, where it could be deployed. In the absence of such buffer, the market may be forced to rebalance through demand destruction as prices rise sharply.
“The first week the crisis was a transportation issue, which could conceivably be resolved quickly. But it is turning into a producibility concern as well,” says Jim Burkhard, vice president and global head of crude oil research, S&P Global Energy, a market intelligence company. Re-starting field production of this scale will be a massive technical exercise that could last weeks or more to fully restore output. Downstream and other oil infrastructure damage could potentially limit the pace of recovery of oil flows, including refined products, Burkhard says, adding that market duress are most evident in Asia. Half of the crude oil processed in Asia in 2025 came from the Gulf region. The longer the Strait of Hormuz remains effectively shut, the worse the impact on supplies, inventories and prices.
In principle, such shocks ought to strengthen the case for accelerating the transition to renewable energy. During the early phase of the conflict, energy prices rose across the Europe, but countries with higher shares of renewable power, such as Spain, experienced smaller spikes and less volatility. Diversified energy systems with a strong renewable base thus provide more resilience to fossil-fuel shocks. In India, however, the picture is more complicated.
“Schemes such as the Pradhan Mantri Ujjwala Yojana have delivered clear gains in indoor air quality and public health, but they have also deepened reliance on imported fossil fuels for a basic household need,” Binit Das, renewable energy expert at the Centre for Science and Environment, Delhi. According to February 2026 report by the International Institute for Sustainable Development (IISD), the country’s transition has leaned heavily on fossil fuels, notably LPG and PNG.
Official data show LPG consumption doubling from 15 million tonnes in 2011-12 to 31 million tonnes in 2024-25, with more than 93 per cent of the increase met through imports. That has increased exposure not only to price swings, but also to precisely the kind of supply disruption now unfolding. Das says current crisis has made clear that clean cooking and energy security must be understood together, not separately. India needs not just clean cooking—it needs sovereign clean cooking. The long-term answer involves multiple pathways: biogas and compressed biogas (CBG) from agricultural waste and municipal solid waste, which the government is promoting through SATAT (Sustainable Alternative Towards Affordable Transportation) scheme.
Speaking to DTE, Ashish Khanna, director general of the International Solar Alliance, emphasises on greater reliance on electricity for everything from transport to cooking to industrial heating, so that India is less impacted by disruptions in LPG or LNG supply. Electrification, Khanna notes, allows countries to rely more on domestically produced electricity, particularly as solar and other renewable sources expand. A greater integration of renewable energy will however require India to urgently rebuild its grid, financially restructure discoms and domestically manufacture batteries, says Das.
1973 Crisis
Also known as the First Oil Shock, it was triggered by Yom Kippur War (October 1973) between Israel and a coalition of Arab states. OPEC (Organization of the Petroleum Exporting Countries), particularly Arab members, imposed an oil embargo on countries supporting Israel (primarily the US, Western Europe and Japan). Oil prices quadrupled from US $3 per barrel to $12. Severe shortages and long queues were reported at gas stations in the US and Europe. Global economic recession and inflation followed (“stagflation”).
1979 Crisis
Triggered by Iranian Revolution that toppled the Shah of Iran. Production in Iran collapsed and exports fell sharply. Panic buying and speculation led to further price increases. Oil prices doubled from $15 per barrel to $39, renewed global inflation and economic slowdown. The crisis intensified interest in energy conservation and alternative energy.
1990 Oil price spike
Caused by Iraq invasion of Kuwait or Gulf War in August 1990. Fears of disruption in global oil supply prompted a sharp price increase. Oil prices jumped from $20 per barrel to over $40 temporarily and stabilised after coalition forces liberated Kuwait in early 1991.
2008 Oil price spike
Caused by strong global demand, especially from China and emerging economies. Geopolitical tensions (West Asia) and limited spare capacity resulted in tight supply. Oil prices hit a record high of $147 per barrel in July 2008. Global economic slowdown followed. Sharp price collapse later in 2008 after the global recession.
2020 Oil price spike
Triggered by global demand collapse due to COVID-19 lockdowns and price war between Russia and Saudi Arabia in early 2020 exacerbated oversupply. WTI (West Texas Intermediate) crude futures briefly went negative in April 2020, the first time in history, led to bankruptcies in oil and gas sector.
2026 Oil price spike
The US–Iran tensions have driven Brent crude prices up from $80 per barrel on March 2 to $120 on March 9—a 50 per cent spike in less than a week. Higher fuel prices expose India and several other Asian countries to compounding risks such as potential increase in cost of transport, manufacturing, fertiliser and food production.
This article was originally published as part of the special package "Attacks that will outlast the war" in the April 1-15, 2026 print edition of Down To Earth