How it unfolded
In recent weeks, the geopolitical landscape of the Middle East has shifted dramatically, casting a shadow over the global energy market. Just before the key developments unfolded, India was enjoying a relatively stable supply of liquefied natural gas (LNG) from Qatar, which accounted for approximately 40% of its total LNG imports. However, the tranquility was shattered when a series of attacks by Iran targeted Qatar’s Ras Laffan LNG hub, leading to catastrophic damage that would sideline 17% of Qatar’s LNG capacity for an estimated 3 to 5 years.
On the morning of the attacks, reports began to surface about the escalating tensions in the region. By midday, the news broke that the Strait of Hormuz, a vital artery for global oil and gas transportation, had become nearly impassable due to Iranian military actions. This strait is crucial not only for Qatar’s LNG exports but also for India’s crude oil imports, with 40% to 50% of its crude transiting through these waters. The implications were immediate and severe, as Brent crude prices surged more than 10%, briefly exceeding $119 per barrel.
As the dust settled on the initial chaos, QatarEnergy’s CEO, Saad al-Kaabi, expressed disbelief at the extent of the damage, stating, “never in my wildest dreams” did he expect such an assault on critical energy infrastructure. The urgency of the situation prompted Indian officials to scramble for alternative energy sources. With 90% of India’s LPG imports also reliant on transit through the Strait of Hormuz, the stakes were high. Indian officials, including Randhir Jaiswal, called for the protection of civilian energy infrastructure amidst the ongoing conflict.
In the days following the attacks, European gas prices skyrocketed by 35%, reflecting the immediate market reaction to the supply disruption. As the situation unfolded, India found itself in a precarious position, heavily reliant on imports for 85% to 90% of its oil needs. The top five sources of crude petroleum for India—Russia, Iraq, Saudi Arabia, UAE, and the USA—account for around 83% of its imports in fiscal 2025. This dependency underscores India’s vulnerability to disruptions in the Middle East.
To mitigate the impending crisis, Indian energy officials, including Sujata Sharma, announced efforts to secure LNG and LPG from alternative sources. “We are trying to pick up the cargoes from other sources,” she stated, highlighting the urgency of the situation. However, experts like Sumit Ritolia warned that if disruptions through the Strait of Hormuz persist, Indian buyers may be forced to procure higher-priced spot cargoes or even reduce consumption, further straining the economy.
As the weeks progress, the damage to Ras Laffan has created a multi-year supply loss in the LNG market, raising concerns about energy security not just for India, but for countries across Europe and Asia that depend on Qatari LNG. India’s domestic LPG production from refineries has seen a significant increase of about 36% as the nation attempts to bolster its energy independence in the face of these challenges.
Currently, the situation remains fluid, with ongoing military tensions in the region complicating efforts to restore normalcy. The international community watches closely as the ramifications of these attacks ripple through global energy markets, affecting prices and supply chains. Details remain unconfirmed regarding the full extent of the damage and the timeline for repairs, but the urgency for India to diversify its energy sources has never been clearer.
This sequence of events matters profoundly for India, which is navigating a precarious path in securing its energy future. The reliance on a single source for such a significant portion of its LNG needs has exposed vulnerabilities that could have lasting impacts on its economy and energy policy. As the world grapples with the fallout from these attacks, the need for strategic planning and diversification in energy sourcing becomes paramount for India and its allies.
