India’s crude oil supply chain remains under severe strain despite a sharp fall in global prices following the reopening of the Strait of Hormuz, with tanker congestion, elevated freight costs and disrupted Gulf production expected to delay full normalisation for months.
Global crude prices dropped 14% to $93.93 per barrel after Iran agreed to reopen the Strait under a two-week ceasefire, reversing a surge that had pushed Brent above $111 per barrel and WTI beyond $117 per barrel at the peak of the conflict. The Strait — a key artery carrying nearly 20% of global oil flows — had been effectively choked after Iran blockaded it in response to US and Israeli strikes starting February 28, triggering a supply shock that hit India’s import-dependent energy system.
Even as prices ease, India’s physical supply chain remains disrupted.
Tanker Trap
At the centre of the crisis is a massive shipping backlog. Around 187 laden tankers carrying 172 million barrels of crude and refined products remain stranded within the Strait, choking outbound flows.
“Currently, a large number of tankers laden with crude, condensate, and refined products are stranded inside the Middle East Gulf… roughly 132 million barrels of crude and condensate are effectively stuck,” said Nikhil Dubey, Senior Refining Analyst at Kpler.
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“The 14-day ceasefire creates a key window to begin clearing this backlog and restore outbound flows,” he added, noting that progress would depend on how effectively the agreement is implemented.
For India, which sources over 60% of its crude from the Middle East, this translates into delayed cargoes, tighter supply and operational uncertainty for refiners.
Shipping constraints continue to dominate the near-term outlook. Sourav Mitra, Partner – Oil & Gas at Grant Thornton Bharat, said the correction in crude prices has not yet translated into relief on logistics. “Benchmark Brent crude dropped around 16%, reflecting easing risk premiums, though prices still remain above pre-conflict levels. However, shipping and insurance costs remain elevated… meaning freight rates may soften but won’t normalize immediately,” he said.
He added that “corrective relief in freight costs may lag the drop in commodity prices, keeping delivery timelines and per-barrel shipping premiums for Indian refiners elevated for several weeks.”
Rahul Chopadekar, VP Marketing at Rubix Data Sciences, said tanker dislocations have structurally tightened supply. “The massive diversions around the Cape of Good Hope effectively reduced global tanker capacity by 10% to 12%,” he said.
While freight rates may correct by 15–25% from peak levels, he warned that Indian refiners could face 14–21-day delays in shipments in the coming weeks due to congestion, rerouting and fleet realignment.
Prashant Vasisht, Senior Vice President at ICRA, said the dislocation will take time to unwind. “Shipping and freight costs will take 1-3 months to normalise due to dislocation of ships and market incorporating new rates cautiously,” he said.
“Tanker rates had already shot up… tanker rates could take months to normalise. Accordingly costs for Indian refiners would be higher during this period,” he added.
Mitra also flagged prolonged tightness in tanker availability. “Tanker availability will remain constrained for few months… vessels won’t be fully operational for few months,” he said, pointing to the time required for repositioning ships currently anchored outside the Gulf.
“This tight supply is expected to delay deliveries to Indian refiners, keeping freight rates elevated and pushing per-barrel costs,” he added.
Normalization Lag
Beyond shipping, disruptions to oil production and refining capacity in the Gulf are expected to delay supply recovery.
“Normalisation of corridor can be within weeks however volumes to build up to earlier levels will take several months as several oil production facilities have been shut and there are damages to several facilities,” Vasisht said.
Mitra echoed the concern, saying, “Fully restoring operational normalcy across Middle East energy corridor will realistically take several months… restarting normal flow can’t happen overnight,” citing infrastructure repairs, tanker backlogs and logistical bottlenecks.
He added that disruptions could extend longer. “The industry projects that some form of disruptions may continue into late 2026,” he said, underlining the risk of prolonged instability.
Vibhuti Garg, Director at IEEFA, said the easing in prices should not be misread as supply normalisation. “The two-week ceasefire has already led to a correction in Brent crude prices. However, it is still too early to conclude that this will translate into a meaningful decline in freight and shipping costs,” she said.
She noted that “war-risk insurance premiums are still elevated… and there is a significant backlog of vessels,” adding that any decline in freight rates would be “limited and gradual rather than sharp or sustained.”
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On timelines, Garg said, “A ceasefire does not immediately translate into operational normalcy… restoring flows to pre-crisis levels will take time,” citing persistent risks and logistical constraints.
She also flagged continued tightness in tanker supply. “We do expect some tightness in tanker availability in the coming weeks… delivery timelines could remain stretched… and freight costs may stay elevated,” she said.
Pranav Master, Senior Practice Leader and Director at Crisil Intelligence, said the Strait may be open, but the operating environment remains fragile. “The ceasefire has created a window for de-escalation, but the operating environment across the Strait of Hormuz is expected to remain sensitive,” he said.
He noted that shipping activity had dropped by as much as 90% during the crisis, effectively choking global oil flows. “Operational normalcy is expected to be progressive rather than immediate, with confidence restoration being the primary constraint,” he added.
For India, the recovery is expected to be staggered. Clearing stranded cargoes may take several weeks, while shipping schedules and freight markets could take one to three months to stabilise. A full restoration of supply — including Gulf production and refining output — could take several months, with risks extending further if disruptions persist.
TOPICSCrude oilThis article was first uploaded on April eight, twenty twenty-six, at seventeen minutes past seven in the evening.