From South Pars to Hormuz: India’s energy strategy faces its biggest test yet

On 18 March, Israeli airstrikes targeted Iran’s South Pars natural gas field and the onshore processing hub at Asaluyeh, marking a sharp escalation in the ongoing conflict. Iranian state media reported damage to gas processing infrastructure linked to multiple phases of the offshore field, with explosions forcing the shutdown of facilities capable of handling roughly 100 million cubic metres of gas per day. Asaluyeh, Iran’s primary petrochemical and refining complex, processes output from South Pars, which accounts for 75-80 per cent of the country’s total gas production and reached approximately 730 million cubic metres per day in 2025.

Iran responded quickly. Missile strikes reportedly hit Qatar’s Ras Laffan Industrial City, causing significant damage to processing units, while Tehran issued explicit threats against energy infrastructure across Saudi Arabia, the UAE, and Qatar. Sites such as Ras Laffan, Saudi Arabia’s Jubail complex, and the UAE’s Al Hosn gas field were identified as “legitimate targets”. Qatar, which shares the North Dome field with Iran, publicly blamed Israel for initiating strikes on a jointly held resource.

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This shift from targeting military or nuclear facilities to directly striking energy infrastructure marks a structural turning point. South Pars/North Dome is the world’s largest gas field, with an estimated 1,800 trillion cubic feet of reserves. While Iran relies on the field primarily for domestic consumption — power generation, petrochemicals, and condensate exports — Qatar’s side underpins roughly 20 per cent of global LNG supply. Disruptions therefore extend far beyond Iran’s internal energy balance, threatening interconnected global supply chains.

Markets reacted immediately. Brent crude rose above $107-110 per barrel, while global gas benchmarks increased by 5-8 per cent across major markets. These movements reflect growing concern over potential disruptions through the Strait of Hormuz, which carries roughly one-fifth of global oil and a significant share of LNG trade. With Iran signalling further escalation and prior phases of the conflict already constraining maritime flows, the risk of sustained volatility has increased sharply.

For India, these developments carry immediate and structural implications. As the world’s third-largest energy consumer and fourth-largest LNG importer, India remains heavily dependent on external supply. It imports approximately 85-88 per cent of its crude oil and most of its natural gas requirements. As of early 2026, between 40 and 50 per cent of India’s crude imports and 55-65 per cent of LNG shipments transit the Strait of Hormuz. Qatar alone accounted for roughly one-third to over 40 per cent of India’s LNG supply in 2025, with Qatar, the UAE, and Oman collectively representing around two-thirds of total LNG imports.

Even before the strikes, tensions in the Gulf had begun to strain supply chains. Tanker diversions, delays, and tighter inventories had already reduced India’s buffer capacity, particularly for LNG, where storage remains limited compared to crude reserves. The South Pars and Asaluyeh strikes, combined with Iranian retaliation against Qatari infrastructure, intensify these pressures. Disruptions at Ras Laffan could reduce LNG availability by over one million tonnes per month for South Asian markets, directly affecting India’s power generation, fertiliser production, and city gas distribution networks.

The economic transmission channels are immediate. Energy imports significantly influence India’s inflation dynamics, particularly through fuel costs, transportation, and industrial inputs. A sustained increase of $10-15 per barrel in crude prices, combined with higher LNG costs potentially exceeding $12/MMBtu at key terminals such as Dahej, would widen the current account deficit and exert downward pressure on the rupee. Previous periods of Gulf instability have shown how quickly such shocks translate into higher retail fuel prices and broader inflationary pressures.

The current escalation also exposes structural constraints within India’s energy system. Domestic gas production meets only about half of demand, leaving the economy highly exposed to external shocks. Any prolonged disruption in Gulf supplies would force increased reliance on coal, delaying energy transition goals and raising environmental costs. While diversification efforts have expanded sourcing — particularly from Russia, the United States and Africa — recent shifts back towards Middle Eastern supply have again increased Hormuz exposure to nearly half of total imports. Strategic petroleum reserves offer a limited buffer, but LNG storage capacity remains insufficient.

India’s response has been pragmatic but incomplete. The country has expanded its crude sourcing to include around 40 supplier nations and increased LNG procurement from the United States and Australia. Diplomatic engagement has secured alternative cargoes in the short term, while long-term strategies emphasise renewable energy expansion, targeting 500 gigawatts of non-fossil capacity, and investments in green hydrogen partnerships. These efforts improve resilience but do not eliminate vulnerability to chokepoint disruptions.

In this context, the strategic relevance of Chabahar port has gained renewed attention. Located on the Gulf of Oman, outside the Strait of Hormuz, Chabahar provides India with an alternative access route to Iran, Afghanistan, Central Asia, and Russia through the International North-South Transport Corridor (INSTC). India has maintained its investment in the port despite geopolitical constraints, viewing it as a hedge against both maritime chokepoints and overdependence on traditional transit routes.

While Chabahar cannot replace Hormuz-dependent oil and gas flows, it enhances logistical flexibility. It supports alternative trade corridors, facilitates regional connectivity, and preserves India’s strategic engagement with Iran. In a scenario of prolonged instability, such infrastructure could play a role in enabling limited diversification of supply routes and maintaining economic linkages with Eurasian markets.

India’s broader geopolitical approach reflects a strategy of calibrated balancing. By maintaining relationships with Israel, Gulf states, the United States, and Iran simultaneously, New Delhi has avoided the costs of rigid alignment while preserving access to critical energy supplies. However, this multi-alignment strategy faces increasing pressure as the conflict expands into energy infrastructure and regional actors are drawn more directly into confrontation.

Looking ahead, India’s energy security strategy will need to adapt to a more volatile environment. Three priorities stand out. First, expanding both crude and LNG storage capacity to enhance short-term resilience. Second, accelerating diversification of supply sources and transit routes, including intra-Asian energy swaps and overland corridors. Third, scaling domestic renewable energy and alternative fuels to reduce long-term import dependence.

The March 2026 strikes on South Pars and Asaluyeh highlight a fundamental shift: energy infrastructure is no longer insulated from geopolitical conflict. Instead, it has become a central arena of competition, where disruption carries both regional and global consequences.

For India, this moment serves as a warning. The country has demonstrated flexibility in managing supply shocks and navigating complex geopolitical dynamics. Yet its structural dependence on external energy and on vulnerable transit routes remains a defining constraint. Without sustained investment in diversification, storage and domestic capacity, future disruptions could impose increasingly severe economic costs.

In an era where energy systems themselves are becoming targets, resilience will depend not only on access to supply but on the ability to anticipate and adapt to systemic risk. The South Pars strikes make clear that this is no longer a theoretical challenge — it is an operational reality shaping the future of energy security.

(Dr. Umud Shokri is a Washington-based energy strategist and geopolitical analyst specialising in global energy markets, energy security, and the geopolitics of the Middle East and Eurasia. He is a senior visiting fellow at George Mason University, where his work focuses on oil and gas markets, energy infrastructure, sanctions, and the strategic implications of shifting global energy dynamics. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)