South Asia is once again experiencing a hit to its energy stability because of events happening far beyond its borders. The ongoing Iran-Israel conflict, which started on 28th February, 2025 after the coordinated attacks of US and Israel on Iran is triggering a situation of energy crisis in South Asian countries. At the centre of this crisis lies the Strait of Hormuz, which manages almost 20% of global oil and gas supply and the closure of this chokepoint by Iran has choked supply chains and exposed vulnerabilities of energy importing countries like India, Bangladesh, Pakistan and Sri Lanka.
Sri Lanka offers the most immediate and visible example of how deeply this disruption is being felt. It imports nearly 90% of its oil and gas through Strait of Hormuz, making it extremely vulnerable to any disruption in this route. Following the halt in the Strait of Hormuz Sri Lanka witnessed a 8% rise in retail fuel prices. The government responded to this and declared a holiday on every Wednesday for public institutions to conserve fuel and President Anura Kumara stated that “We must prepare for the worst, but hope for the best”. Sri Lanka which is still recovering from the 2022 economic crisis, now faces the risk of another prolonged downtown if energy shortages persist. In response, Sri Lanka has turned to India for help and India has assured that it will maintain the oil supply and provide energy security to Sri Lanka via its Indian Oil Corporation subsidiary in Sri Lanka. Additionally Sri Lanka has also re launched the National Fuel Authorisation System using QR code for fuel, under this system, fuel will only be given to vehicles with valid QR codes and weekly fuel Quotas have also been established according to vehicle category.
India’s situation, while more complex due to the size and diversity of its energy consumption, reflects similar structural challenges. The country imports roughly 40-50% of its crude oil from the Strait of Hormuz. It also imports around 60% of the country’s Liquefied Natural Gas (LNG) from outside and out of this 90% travels through the Strait of Hormuz. So due to the halt in the Strait of Hormuz India has been dealing with a shortage of LNG across the country. The situation of LNG shortage led to black marketing of domestic cylinders across the country which further led to rise in prices of domestic cylinders in various major cities of India including New Delhi, Mumbai, Kolkata and Chennai. The black market and shortage crisis also hits hotels and restaurants and forced many of them to shut down. To overcome these challenges, the Indian government has ordered its refineries to maximise the production of domestic LPG and divert gas supplies from non-priority sectors to key users. India has also bought millions of barrels from Russia after getting a 30-day sanctions waiver from the US.
Bangladesh presents another dimension of the crisis, where dependence on Middle Eastern energy supplies is equally significant. It imports 95 percent of oil and 30 percent of its gas from middle eastern countries like Saudi Arabia and Qatar via Strait of Hormuz. After the outbreak of conflict in West Asia, Qatar suspended all its deliveries to Bangladesh which created a huge shortage of gas and oil in Bangladesh. This shortage increases the price of LNG across the country and made people panic buying and stockpiling of oil. Taking account of this Bangladesh’s government put rations and daily limits on fuel sales. As a part of emergency measures to conserve electricity and fuel Bangladesh shut all public and private universities across the country. The government has also asked all foreign-curriculum schools and private coaching centres to suspend operations to limit electricity use. Bangladesh which is on the verge of becoming a developing nation can be hurt badly by this oil and gas shortage due the Iran-Israel war in West Asia.
Pakistan’s experience further illustrates the broader regional impact of the crisis. The country gets more than 85% of its crude oil from Saudi Arabia and the United Arab Emirates via the Strait of Hormuz route. The halt in the Strait of Hormuz has led to an increase in oil prices in Pakistan by 20% and also resulted in long queues at petrol stations. The increase in oil prices also led to increase in monetary tensions for Pakistan. To overcome this Pakistan has introduced a 25% salary cut, travel bans, limits on wedding guests and reduced fuel use. At the same time, Pakistan has experienced some relief in the electricity sector. The country’s sustained, people-led shift towards solar energy following the Russia–Ukraine war of 2022 has provided a degree of insulation against the current crisis. This transition has helped reduce dependence on imported fuels for electricity generation, offering a limited but important buffer in a period of uncertainty. Overall, for Pakistan which is already a suffering economy these increased fuel prices and budget pressure could hurt their economy more.
Taken together, these developments highlight a common pattern across South Asia. The region’s heavy reliance on energy imports routed through a single strategic chokepoint has created a shared vulnerability. The Iran–Israel conflict has not only disrupted supply chains but has also exposed the structural fragility of energy systems across these economies. As the conflict continues, South Asia finds itself navigating a situation where external geopolitical tensions are directly shaping domestic economic realities. The Strait of Hormuz, once seen primarily as a distant strategic passage, has now become central to the region’s immediate economic concerns. The current crisis serves as a stark reminder that in an interconnected world, regional stability is often determined by events far beyond national borders.
