Strait of Hormuz Closure Threatens India's Fuel Subsidy Buffer

India's oil marketing companies carry direct exposure. The government recently gave OMCs ₹1.23 lakh crore in support to hold fuel prices. That buffer works in normal conditions. A sustained closure would force India to source crude from longer routes – West Africa, the US – at higher freight costs. The domestic diesel market is already under strain. Bulk users diverted 3.50 lakh tonnes of diesel to retail outlets in May, forcing the government to cap sales. Any supply disruption would worsen that imbalance.

The diplomatic layer adds friction. On June 12, Indian External Affairs Minister S. Jaishankar phoned US Secretary of State Marco Rubio to protest the killing of three Indian seafarers by US strikes in the Gulf of Oman on June 9. That incident complicates India's position as a major buyer of Iranian oil under sanctions waivers.

The 60-day window, which began with the interim US-Iran agreement, expires in mid-August. The Strait of Hormuz remains closed for now. The clock is ticking on New Delhi's fuel subsidy strategy.