Hormuz Standstill: India's Oil Supply Risks Amid US Pledges

May 4, 20263 min readMiddle East

Iran's tactics expose India to rising oil supply risks.

Hormuz Standstill Leaves India Exposed Despite US Pledge

Iran is freezing Hormuz by driving up commercial risk, not by formally closing it — exposing Gulf exporters and forcing India to pay for supply insurance.

Iran still holds the leverage in Hormuz. Reuters reports that most shipping through the strait remained at a standstill on May 4 despite Washington’s latest pledge, extending a disruption that earlier pushed traffic down to about seven ships in 24 hours versus roughly 140 normally and left hundreds of vessels stuck inside the Gulf. Most Strait of Hormuz shipping at a standstill despite latest US pledge Hormuz at near standstill as Iran warns ships to keep to its waters

Why Tehran’s leverage is working

The US has already tried the standard toolkit. In March, President Donald Trump ordered political-risk insurance support and said the US Navy could escort tankers through the Gulf. Trump orders oil tanker insurance support, says Navy could escort ships in Gulf But Reuters’ subsequent analysis found that escorts and guarantees were unlikely to neutralize the real deterrents — mines, drones, missiles, fast boats, and insurer caution — while the cost of chartering a 2-million-barrel Gulf-to-Asia tanker had climbed to about $30 million, around five times the level at the start of the year. Trump's Hormuz shipping plan is too little, too late in race to avert energy shock

That is the core power shift. Tehran does not need a formal closure to disrupt flows; it only needs shipowners and underwriters to conclude that passage is commercially irrational. Reuters has reported that Iran has directed ships toward routes near Larak Island and later floated a proposal to let vessels exit safely through the Omani side of Hormuz if broader conditions were met. Around 20% of the world’s oil and LNG normally transits the chokepoint. Hormuz at near standstill as Iran warns ships to keep to its waters Exclusive: Iran proposes letting ships exit safely through Oman side of Hormuz, source says

For broader international coverage, the point is simple: commercial confidence, not naval tonnage, is now the bottleneck.

India’s exposure is immediate

For India coverage, this is not an abstract shipping story. The Hindu, citing Indian trade data, reported that India imported nearly 91% of its crude needs in February 2026 and that West Asia’s share of those imports rose above 54%. Crucial dependence: West Asia’s share in Indian oil imports rose to 54% just before the Iran war

Another report said roughly half of India’s February crude imports passed through Hormuz, even as refiners sought extra barrels from Russia, the United States, West Africa, and Latin America. India taps alternative crude supplies as Iran conflict drags on That makes India a clear loser from a prolonged standstill: even if volumes are replaced, freight, insurance, and voyage times rise.

What to watch next

The next test is not another US statement. It is whether daily transits rise materially from Reuters’ April levels, whether insurers reopen war-risk cover at workable prices, and whether Tehran’s Omani-side safe-passage idea turns into a real negotiating channel. Hormuz at near standstill as Iran warns ships to keep to its waters Trump orders oil tanker insurance support, says Navy could escort ships in Gulf Exclusive: Iran proposes letting ships exit safely through Oman side of Hormuz, source says

If those indicators do not move soon, the beneficiaries will be alternative exporters outside Hormuz. The losers will be Gulf producers and Asian importers — with India near the front of that queue.

Originally published by Reuters.

Sources (14)

Hormuz at near standstill as Iran warns ships to keep to its waters | Reuters

reuters.com

Exclusive: Iran proposes letting ships exit safely through Oman side of Hormuz, source says | Reuters

reuters.com

Trump orders oil tanker insurance support, says Navy could escort ships in Gulf | Reuters

reuters.com

What does a US naval blockade of Iran mean for oil flows? | Reuters

reuters.com

Trump's Hormuz shipping plan is too little, too late in race to avert energy shock | Reuters

reuters.com

Crucial dependence: West Asia’s share in Indian oil imports rose to 54% just before the Iran war - The Hindu

thehindu.com

Asian countries most vulnerable to Strait of Hormuz blockade | The Straits Times

straitstimes.com

India taps alternative crude supplies as Iran conflict drags on - The Hindu

thehindu.com

Vessel traffic through Strait of Hormuz drops amid West Asia tensions - The Hindu

thehindu.com

India’s crude oil imports declined nearly 17% in March, says data - The Hindu

thehindu.com

Venezuela, Russia step up crude shipments, India benefits - The Hindu

thehindu.com

How the US blockade of Iranian ports could impact China and India, with wider spillover effects | The Straits Times

straitstimes.com

Why India Is Not Energy-Secure Amid Global Oil Shocks - Frontline

frontline.thehindu.com

US oil floats to top as Asia looks for Middle Eastern alternatives amid Iran war | South China Morning Post

scmp.com

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