Even as the Strait of Hormuz reopens to restore energy flows and bolster market confidence, normalisation and inventory recovery will take longer, a new S&P analysis has noted.
India’s diversified energy sourcing strategy mitigated major disruptions caused by the West Asia conflict, keeping April and May 2026 liquefied natural gas (LNG) imports near normal levels despite a 17 per cent cut to global supply, a new analysis by S&P Global Energy has revealed.
The analysis highlights the remarkable flexibility displayed by India’s LNG market, the world’s fourth‑largest buyer of the fuel. The Strait’s closure disrupted approximately 17 per cent of the global LNG supply. However, India successfully diversified supply sources to include Oman, the US, Nigeria, and Angola. Consequently, LNG imports saw minimal impact, declining only 5 per cent and 2 per cent year‑over‑year in April and May 2026, respectively.
“India is expected to retain some of this diversified LNG sourcing considerations to mitigate future disruptions, potentially influencing its long‑term sourcing strategies,” said Johan Utama, Principal Research Analyst, S&P Global Energy, during an energy roundtable in New Delhi on Tuesday.
The analysis also reiterated that global upstream markets like India are increasingly prioritising resource security, portfolio diversification and disciplined investment. The objective to ensure energy security is now fundamentally linked to upstream access and international portfolio diversification.
“Looking ahead, the current environment reinforces a clear directional shift for both global and Indian upstream sectors: resilience is becoming the defining metric of value. Access to stable resources, accelerated project timelines, and diversified supply portfolios are taking precedence over pure scale or cost optimisation,” said Nick Sharma, Executive Director, Upstream Energy, at the market intelligence firm.
Since March 2026, when the conflict started, the shipping sector has also adapted to redrawn trade routes. While energy supplies were severely constrained through the Strait of Hormuz, with vessel movements plummeting to 10 per cent of pre‑conflict levels, the energy system adapted quickly.
“The past months have underscored the adaptability of both producers and consumers. The industry’s ability to reroute supply, optimise logistics, and secure alternative barrels has helped mitigate what could have been a far more severe disruption to global energy markets,” said Benjamin Tang, Director and Global Head of Liquid Bulk, Commodities at Sea.
This included establishing alternative routing via the Red Sea and expanded ship‑to‑ship transfers east of Hormuz, helping effective Middle East crude exports rebound to over 10 million barrels per day in June.
Prolonged Market Adjustment
Even as the opening of the Strait of Hormuz is expected to facilitate the recovery of energy flows and strengthen market confidence, stakeholders view market normalisation and inventory replenishments taking more time, the S&P analysis said. Following the June 17 MoU between the US and Iran, global energy flows are entering a new phase of realignment.
Experts from the S&P Global Energy team stated that these developments reinforce the critical importance of diversified supply chains, resilient infrastructure, and strategic resource access. Across upstream markets, LNG trade and maritime logistics, the ability to adapt to changing geopolitical realities is emerging as the key determinant of long‑term energy security.
The energy shock has also revealed some bright spots.
“The effective closure of the Strait of Hormuz was the largest oil supply disruption in history. It was—and for the moment, still is—extraordinary. But what is surprising—even extraordinary—is the limited price reaction,” said Jim Burkhard, Vice President & Head of Research for Oil Markets, Energy and Mobility. “If flows via Hormuz and Gulf production do begin to recover, it will take time, and global oil inventories will continue to fall through June and July. This means upward price pressure could return as inventories fall to even lower levels.”
The effective closure of the Strait of Hormuz resulted in a 15 million barrels per day cut in Gulf liquids production. However, the price reaction has been surprisingly limited due to aggressive inventory and demand management globally, including sharp reductions in crude imports by China and Japan, and higher exports from the US.