India’s import dependency will reach unsustainable levels within four years, with crude oil imports climbing to 94% and natural gas to 65%, according to S&P Global’s analysis of the country’s energy security amid Middle East disruptions.
“In 2026, Indian NOCs face production declines, with limited near-term growth. This, combined with limited upstream expansion, erodes their ability to leverage the price upside and limits their contribution to the government’s arsenal to fight the price shock. By 2030, according to S&P Global, India will face an import dependency of 94% for crude oil and 65% for natural gas,” said the report, published on the S&P website.
It said: “The Middle East war offers an unprecedented opportunity to complete and accelerate India’s energy reform agenda.”
Doubling demand compounds the challenge
The forecast represents a sharp deterioration from current levels. “India’s energy demand is forecast to double in the next 25 years, offering an opportunity to build cleaner, more efficient infrastructure. This can further improve energy security and affordability by reducing dependence on imports.”
But the structural challenge runs deeper than demand growth alone.
60% dependency on Strait flows today
India has deliberately chosen not to compete for upstream stakes globally, a strategy that has left it vulnerable as geopolitical shocks disrupt supply chains.
“India’s geographical proximity to the Middle East means that energy flows from the region are embedded in the country’s energy system and play a critical role in meeting its growing demand. In February 2026, before the crisis hit, India was dependent on flows inside the Strait for approximately 60% of its crude oil and LNG imports and approximately 85% of its LPG imports.”
A country’s energy security often appears robust until tested in real time. “The sudden disruption to flows through the Strait of Hormuz has demonstrated how quickly a tightly optimized, pragmatically positioned energy supply chain can be pushed into stress.”
S&P Global argues India must fundamentally shift its approach to energy investment. “Over the past decade, the country has largely pursued downstream supply over upstream ownership across crude oil and natural gas. While regional peers, such as Thailand’s PTT Exploration and Production, which face declining domestic production or maturing oil and gas basins have resumed international expansion, India’s national oil companies (NOCs) have so far sat out of Internationalization 2.0.”
The cost of this strategy is becoming apparent. “As India’s economic might rises, so too will the cost of supply disruption.”
Japan’s 99% model offers blueprint
S&P Global identifies a specific path forward, drawing on how other nations manage similar dependencies.
“Japan has an import dependency of 99%, and its supply diversification strategy involves supply deals and ownership of upstream stakes. While Japanese companies such as Inpex are exposed to the Strait of Hormuz chokepoint (with 45% of total production from the Middle East and a net present value exposure of $19 billion), these companies remain major buyers of upstream assets, combining financial returns with an overarching element of energy security.”
NOCs need upstream stake strategy
The report calls for what it frames as a strategic reset. “India’s fossil fuel strategy targets growing domestic exploration and production and supplier diversification. This is a good foundation; however, the country also needs a diversified portfolio of upstream positions that deliver strategic value to India while accruing financial value for its NOCs. Indian NOCs need their own version of Internationalization 2.0.”
The broader narrative is one of compressed timelines. “Needing deeper self-reliance and decarbonization will push the energy system to compress and collapse timelines between the 2047 advanced energy economy and a 2070 net-zero future.”
S&P Global identifies five immediate priorities: increasing secure domestic energy sources; securing non-Strait-dependent supply through NOC internationalization; improving flexibility in contracts and demand response; pushing upstream investment; and building comprehensive energy storage infrastructure.
