How Prolonged US-Iran Conflict Could Strain Global Oil Supplies and Hit India

The ongoing US-Iran war has generated one of the biggest oil-supply shocks in recent history, yet crude prices have risen only modestly thanks to emergency actions such as the IEA’s unprecedented 400 million-barrel release and the United States tapping its Strategic Petroleum Reserve, now at its lowest level since January 1983. The Energy Information Administration’s August outlook projects that oil production and trade patterns will not return to pre-conflict levels until early 2027, and that prices will remain high until inventories are replenished.

Global oil inventories, estimated at about 8 billion barrels by OPEC, can theoretically cover the current 5 million-barrel-per-day deficit for roughly 300 days, but usable reserves may last closer to 180 days. Experts highlight uneven geographic distribution, logistical constraints and limited bypass capacity as key bottlenecks, while new supply from the UAE, US, Guyana, Brazil and possibly Venezuela could slow inventory drawdowns.

China’s reduced imports and sizable strategic reserves act as a stabilising factor, though it is unlikely to release large volumes for the global market. For India, a diversified crude basket—including record Russian supplies—mitigates direct supply risk, but a prolonged deficit would push crude prices higher and could be compounded by a proposed US tariff on Russian oil, affecting the country’s import costs.