Strait of Hormuz Reopening: Recovery Likely in Phases From July, LPG to Get Priority

Why It Matters

India’s reliance on Middle‑East energy makes the phased Hormuz reopening critical for stabilizing LPG supplies and preventing price spikes, while the modest crude impact underscores the resilience of its diversified import strategy.

Key Takeaways

• LPG imports at 51% of pre‑war levels, priority restocking
• Phase‑wise reopening starts July, with LPG first, LNG second
• Crude imports resilient via bypass routes, limited near‑term surge
• Potential 400k‑600k b/d Gulf crude increase by August
• Non‑renewal of Russian waivers could accelerate Gulf market share

Pulse Analysis

The Strait of Hormuz, the world’s most vital chokepoint for oil and gas shipments, is slated to resume operations in a staged manner from early July. Energy analysts view the reopening as a pivotal moment for global markets, but its immediate effect will be felt most acutely in India, which sources roughly 91% of its LPG and 60% of its LNG from the Middle East. The disruption has already slashed LPG imports to about half of pre‑conflict volumes, creating a sharp inventory gap that traders are eager to fill as soon as vessels become available.

India’s dependence on Gulf‑origin LPG—used by over 335 million households for cooking—drives the priority allocation of the first cargoes. With inventories depleted, the market anticipates opportunistic purchases that could lift spot prices, especially if vessel scarcity persists. LNG shipments are expected to follow once loading schedules stabilize, while crude oil, buffered by alternative pipelines through Yanbu and Fujairah and bolstered by Russian and Venezuelan supplies, will see a slower normalization. This staggered recovery helps mitigate freight and insurance cost spikes that typically accompany chokepoint closures.

Looking ahead, the potential non‑renewal of Russian‑crude waivers after June 17 could reshape India’s sourcing mix, prompting refiners to swing back toward Gulf barrels. Analysts estimate an incremental 400,000‑600,000 barrels per day of Middle‑Eastern crude could be added by August, contingent on vessel availability and the speed of logistical recovery. Ultimately, the Hormuz reopening promises greater supply flexibility, reduced shipping risks, and a gradual rebalancing of India’s energy portfolio toward traditional Gulf suppliers.