Twenty million barrels daily through a 29-nautical-mile passage
When the United States and Israel struck Iran in late February, they did not merely ignite a military confrontation — they set fire to the invisible infrastructure that keeps modern life running. Oil, the lifeblood of industry and movement, surged nearly 50 percent in price, and the tremors reached every household that heats food, catches a bus, or plants a crop. For India and its South Asian neighbors, geography is destiny: the Strait of Hormuz, a narrow passage barely 29 nautical miles wide, stands between their economies and the energy they cannot do without.
- A single military strike reshaped global energy markets overnight, sending crude to $119 a barrel and forcing governments across South Asia into emergency economic mode.
- India's fuel retailers are bleeding losses of up to Rs 30 per liter while the national treasury absorbs a Rs 1.3 lakh crore hit just to keep pump prices from spiraling further.
- From Nepal's third price hike in a fortnight to Sri Lanka's QR-rationing system and Bangladesh's rolling five-hour blackouts, the region is improvising survival strategies in real time.
- The Strait of Hormuz — carrying a fifth of the world's daily oil supply — remains under Iranian pressure, meaning every policy measure is provisional, contingent on a chokepoint no government in the region controls.
- Ordinary people are bearing the compounding weight: higher transport fares, costlier vegetables, shuttered fertilizer plants, grounded buses, and schools pushed back online.
On February 28, US and Israeli strikes on Iran sent crude oil markets into convulsion. Within weeks, prices climbed nearly 50 percent — peaking at $119 a barrel before settling near $100 — and the consequences moved swiftly from trading floors to kitchen tables across South Asia.
India, which imports 88 percent of its crude largely through the Strait of Hormuz, found itself at the center of the storm. State fuel retailers began absorbing losses of Rs 24 to Rs 30 per liter. The government responded by slashing excise duties at a cost of Rs 1.3 lakh crore to the treasury, while imposing export duties on diesel and aviation fuel to prevent profiteering. Strategic reserves, normally sufficient for 74 days, are currently stretched to around 60.
Across the neighborhood, each government reached for different tools. Nepal raised fuel prices twice in rapid succession. Bhutan began weighing rationing and work-from-home mandates. Pakistan absorbed part of the burden through compensation to oil companies, even as transport fares and food prices climbed. Sri Lanka moved most aggressively — a 25 percent price hike, a midweek public holiday to conserve fuel, and a return to QR-based purchase limits per vehicle, echoing the darkest days of its 2022 economic collapse.
Bangladesh chose a different path, accelerating diesel imports from India through the bilateral friendship pipeline, even as universities shifted online, blackouts stretched to five hours daily, and fertilizer plants shut down for lack of gas — a quiet catastrophe unfolding in the fields before harvest.
At the center of it all sits the Strait of Hormuz, the 29-nautical-mile passage through which roughly a fifth of the world's daily oil supply must travel. As long as Iran holds leverage over that corridor, every price cut, every ration card, every extra train service is a temporary patch on a wound that geopolitics has not yet agreed to close.
On February 28, the United States and Israel struck Iran, and the global oil market has not stopped trembling since. A month later, crude prices have climbed nearly 50 percent—reaching as high as $119 a barrel before settling around $100—and the shock waves are rippling through every country that depends on Middle Eastern energy. For India and its neighbors, the crisis is no longer abstract. It is showing up at the pump, in electricity bills, in the price of vegetables, in the length of queues at petrol stations.
India imports roughly 88 percent of its crude oil, much of it traveling through the Strait of Hormuz, a 29-nautical-mile passage that carries nearly a fifth of the world's daily oil supply. The country also depends on imports for about 60 percent of its liquefied petroleum gas and more than half its natural gas. When prices spike, India feels it acutely. Fuel retailers—IndianOil, Hindustan Petroleum, Bharat Petroleum—are absorbing losses of Rs 24 per liter on petrol and Rs 30 per liter on diesel. The government has moved to cushion both consumers and companies by cutting the special additional excise duty on both fuels by Rs 10 per liter, a decision that will cost the national treasury Rs 1.3 lakh crore. To prevent windfall profits on exports, authorities have imposed export duties of Rs 21.5 per liter on diesel and Rs 29.5 per liter on aviation turbine fuel. India's strategic reserves can sustain the country for about 74 days under normal circumstances, though current availability sits closer to 60 days.
Across South Asia, governments are scrambling with different tools. Nepal's Oil Corporation raised petrol and diesel prices by Rs 15 per liter in late March, less than two weeks after the previous increase. Petrol now costs between Rs 184.50 and Rs 187 per liter depending on location, with diesel and kerosene between Rs 164.50 and Rs 167. Between March 1 and 24 alone, petrol prices had jumped Rs 76 per liter and diesel by Rs 143 per liter on the international market. Bhutan is considering more drastic measures: work-from-home arrangements, targeted rationing, and a focus on essential services only. Officials say current reserves are adequate for now, but stricter steps may follow if conditions deteriorate.
Pakistan has raised kerosene prices by PKR 4.66 per liter while holding petrol at PKR 321.17 and diesel at PKR 335.86. The government continues absorbing part of the cost burden through compensation to oil marketing companies, but the cumulative effect is visible everywhere—transport fares have climbed, and the price of everyday goods from fruits to vegetables has risen. Aviation fuel has surged to PKR 476.97 per liter, pushing up both domestic and international airfares. Sri Lanka has implemented the most aggressive response: a 25 percent fuel price increase, the third since March 1, bringing prices close to levels seen during the country's 2022 economic crisis. Private bus operators are warning of widespread service disruptions. The government has introduced a midweek public holiday for schools, universities, and non-essential workers to conserve fuel, and reinstated a QR-based fuel pass system that limits weekly purchases per vehicle.
In Myanmar, rising prices have triggered shortages and restrictions on private vehicle use based on license plate numbers. Petrol stations have developed long queues, and commuters are shifting to trains, prompting authorities to add extra rail services. Bangladesh is moving in the opposite direction—importing more. The country plans to bring in an additional 45,000 tons of diesel from India by April, transported via the Bangladesh-India Friendship Pipeline from Numaligarh Refinery. The supply crunch has forced universities, foreign curriculum schools, and coaching centers to shift to online classes. Rolling blackouts lasting five hours are now routine, and most fertilizer plants have shut down due to gas shortages, threatening agricultural production and rural livelihoods.
The Strait of Hormuz remains the fulcrum. As Iran tightens its grip over this vital passage, the route that normally carries 20 million barrels daily—roughly a quarter of global seaborne oil trade—remains under pressure. Any disruption sends shocks through energy markets worldwide. Countries from Venezuela to Egypt to Vietnam are implementing their own versions of the same playbook: price hikes, tax adjustments, rationing, work-from-home policies, rolling blackouts. The question now is not whether the crisis will ease, but how long ordinary people can absorb the cost of living in a world where energy flows through a chokepoint controlled by a nation under siege.
Notable Quotes
Fuel retailers are incurring losses of about Rs 24 per litre on petrol and Rs 30 per litre on diesel— Indian government assessment
Private bus owners in Sri Lanka warned of large-scale disruptions due to fuel price increases— Sri Lankan transport operators
The Hearth Conversation Another angle on the story
Why does the Strait of Hormuz matter so much? It's just a waterway.
It's the artery. Twenty million barrels of oil pass through it every single day. That's a quarter of all the oil moving by sea globally. When tensions rise there, every country that doesn't pump its own oil—which is most of them—feels the squeeze immediately.
So India could have built more refineries, stored more oil. Why didn't they?
They have reserves for 60 days. That's actually substantial. But India imports 88 percent of its crude. You can't build your way out of that dependency overnight. The real issue is that when prices spike 50 percent in a month, even a well-prepared country gets hurt. The retailers are losing money on every liter they sell.
The government cut excise duty. That sounds like they're helping people.
They are, but at enormous cost—Rs 1.3 lakh crore. And it's a temporary patch. What happens when reserves drop below 60 days? What happens if the Strait actually closes?
Sri Lanka raised prices 25 percent. That seems brutal.
It is. But they're also introducing midweek holidays and fuel rationing. They're trying to reduce demand while managing the fiscal hit. The transport operators are furious because they can't absorb those costs—they pass them to passengers and cargo.
Bangladesh is importing more diesel from India. Doesn't that make India's shortage worse?
In theory, yes. But India has the refinery capacity and some spare reserves. Bangladesh has almost nothing—they're facing rolling blackouts and fertilizer plant shutdowns. It's a choice between regional stability and national self-interest. Right now, they're choosing the former.
How long can this last?
That depends entirely on what happens in the Middle East. If the conflict de-escalates, prices fall and the pressure eases within weeks. If it escalates—if the Strait actually gets disrupted—we're looking at a genuine energy crisis across Asia.