New Delhi to Berlin: How the world is scrambling to shield economies from the great oil shock

As the war in Iran ripples across global energy markets, governments from New Delhi to Tokyo, Berlin and Bangkok are scrambling to shield their economies from the shock of disrupted oil flows and surging fuel prices.

For India, one of the world’s largest energy importers, the crisis has triggered a race to secure supplies, ration fuel where necessary and calm public fears of shortages. But the response unfolding in the world’s fastest-growing major economy mirrors a broader global scramble as countries tap emergency reserves, cap fuel prices, subsidise consumers and even restrict mobility to conserve energy.

Also Read: India boosts LPG imports from US, Norway as Gulf supplies tighten


India is turning to a wider pool of suppliers — including the United States, Norway, Canada and Russia — to secure additional liquefied petroleum gas (LPG) cargoes, while continuing to draw from available Gulf sources, Oil Minister Hardeep Singh Puri said on Thursday, as the world’s second-largest importer navigates a tightening global market.

"I think India has made the right moves in the short-term to address the supply-side constraints and allay the demand-side needs," said Manas Majumdar, Partner and Leader for Oil & Gas, Fuels, and Resources, PwC India while talking to ET.

"India’s response has been to look at both external alternate sources and also look at prioritizing and redirecting internal domestic supply. On the first front, India already has a fairly diversified supplier base for crude (close to 40 countries comprise India’s crude basket) and they are looking to ramp up from others, including Russia now that sanctions have been waived in short-term.

In addition is looking to source crude from in-transit cargoes, from South American markets and also from Saudi from Red Sea coast and from Oman side to bypass Strait of Hormuz," added Majumdar.

The conflict in West Asia has effectively choked traffic through the Strait of Hormuz, the narrow passage through which roughly one-fifth of the world’s oil normally flows. The resulting disruption has rattled energy markets, pushed up fuel prices and forced governments to activate crisis playbooks reminiscent of past oil shocks.

India moves to protect household fuel supply

In India, the immediate priority has been ensuring the availability of liquefied petroleum gas (LPG) — the cooking fuel used by hundreds of millions of households.

The government on Wednesday invoked emergency powers ordering refiners to maximise LPG production and reduce sales to industry, as disruptions to shipping routes through the Gulf squeezed supplies.

Also Read: India’s West Asia trade artery under strain with up to $4 billion in monthly exports at risk

The measures have already lifted local LPG output by 25%, according to Sujata Sharma, a joint secretary in the Ministry of Petroleum & Natural Gas.

"Panic booking (of LPG cylinders) and hoarding behaviour have been driven by misinformation," Sharma said.

India’s exposure to the crisis is substantial. The country consumed 33.15 million metric tons of cooking gas last year, with imports accounting for around 60% of demand, and nearly 90% of those imports sourced from the Middle East.

The war has also strained India’s broader gas supplies. The country imports roughly half of its 190 million standard cubic metres per day of gas consumption, and LNG imports of 47.4 mmscmd have been hit due to supply constraints and force majeure by its top supplier Qatar, Sharma said.

To manage the crunch, authorities have begun diverting gas supplies from non-priority sectors to critical users while securing alternative cargoes.

India is also sourcing additional energy shipments from other markets. Sharma said two LNG cargoes are already on their way, while refiners have purchased millions of barrels of Russian oil floating on the high seas after Washington granted a 30-day sanctions waiver.

Most Indian refineries are now operating at full capacity to maintain domestic fuel availability.

Even with these measures, the supply squeeze is already rippling through the economy. Restaurants, hotels and industries dependent on LPG have begun to feel the pressure from tighter supplies.

"However there is need for longer-term planning required to mitigate similar crises in future given India has significant import dependence across crude (~90%), gas/ LNG (~50%) and LPG (~60%)," said Majumdar.

India’s long-term resilience must rest on two pillars — strengthening energy security through expanded strategic reserves, diversified crude and LNG sourcing, and exploring transnational pipelines; and advancing energy sustainability by reducing oil dependence through biofuels, electrification and accelerated deployment of renewable energy and storage, he added.

A coordinated global response emerges

India’s efforts form part of a much larger international response to the energy disruption unleashed by the conflict.

In a dramatic step, the International Energy Agency (IEA) on Wednesday agreed to release the largest volume of emergency oil reserves in its history, pledging to make 400 million barrels available from member nations’ stockpiles.

The move marked a turning point in the global response to the crisis, as governments that had previously hesitated to draw down reserves moved toward coordinated action.

IEA members currently hold over 1.2 billion barrels of public emergency oil stocks, with an additional 600 million barrels held by industry under government obligation. About one-third of those reserves will be depleted if the full release goes ahead.

"The oil market challenges we are facing are unprecedented in scale, therefore I am very glad that IEA member countries have responded with an emergency collective action of unprecedented size," IEA Executive Director Fatih Birol said.

"Oil markets are global so the response to major disruptions needs to be global too," Birol added.

Oil markets have already reacted sharply. Brent crude surged to nearly $117 a barrel earlier this week before easing to around $90, still significantly higher than the roughly $68 level seen a month ago.

Advanced economies tap reserves and curb prices

Across Europe and East Asia, governments are deploying a range of tools — from reserve releases to price controls — to stabilise energy markets.

Germany has confirmed it will contribute 2.4 million metric tons of oil from its reserves.

"We will meet this request and do our part, because Germany stands behind the most important tent of the IEA, collectively solidarity," German Economy Minister Katherina Reiche said.

Berlin is also exploring measures to curb fuel price spikes.

Reiche said the government plans to limit petrol stations to one price increase per day, an attempt to counter what regulators call the "rocket and feather effect."

"Fuel prices rise amid higher crude oil costs extremely quickly, the rocket, and then sink again amid falling costs only very slowly, the feather. We want to break through this mechanism," she said.

Austria has already adopted a similar model and will also participate in the coordinated release of reserves.

Japan — one of the most oil-dependent major economies — is moving even more aggressively.

Prime Minister Sanae Takaichi announced that the country will release 15 days’ worth of private-sector stockpiles and one month’s worth of national reserves, amounting to roughly 80 million barrels.

Japan holds one of the world’s largest oil stockpiles, covering about 254 days of demand.

The country’s vulnerability is acute, Takaichi warned, as tankers struggle to pass through the Hormuz chokepoint.

Japan "has an exceptionally high dependence on the Middle East compared with other countries and is therefore likely to be heavily affected," she said.

The government is also preparing subsidies for fuel retailers to prevent petrol prices from soaring.

South Korea has taken similar steps, imposing its first domestic fuel price cap in nearly three decades.

Asia braces for supply shock

The fallout may be felt most acutely in Asia, the world’s largest oil-importing region.

In 2025, the continent relied on the Middle East for about 59% of its crude imports, according to Kpler. For many Southeast Asian countries, the disruption has already forced drastic measures.

In Bangladesh, the government has begun rationing fuel sales, deployed the military to guard oil depots and closed universities to conserve energy.

In Myanmar, authorities have imposed alternating driving days, allowing vehicles with even-numbered plates to operate on even dates and odd-numbered plates on odd dates.

Pakistan has introduced austerity measures including shorter work weeks and school closures to reduce fuel consumption.

"To stabilise the economy we have taken difficult decisions," Prime Minister Shehbaz Sharif said.

In the Philippines, some government offices have shifted to a four-day work week, while public institutions have been ordered to cut fuel use by at least 10%.

Meanwhile Vietnam has urged companies to expand work-from-home arrangements and is removing tariffs on fuel imports to stabilise supplies.

China stands relatively insulated

Among major economies, China appears best positioned to weather the shock.

The country has built one of the world’s largest strategic petroleum reserves over the past two decades, providing several months of supply. It also continues to receive shipments of Iranian crude, some of which remains stored on tankers in the South China Sea, according to vessel-tracking data.

China’s rapid adoption of electric vehicles also reduces its vulnerability. One-third of new cars sold in the country are electric, limiting the impact of rising petrol prices.

A crisis that echoes past oil shocks

The scale and speed of the global response highlight the seriousness of the disruption.

Since the conflict began with U.S. and Israeli strikes on Iran on Feb. 28, oil tanker traffic through the Strait of Hormuz has nearly halted, while strikes on oil and gas facilities across the region have deepened supply fears.

Major producers such as Iraq, Kuwait and the United Arab Emirates have even been forced to cut output due to storage constraints as exports slow.

For energy-hungry economies like India, the episode underscores the enduring vulnerability created by reliance on imported fuel.

The coming weeks will test whether emergency reserves, market adjustments and government interventions can keep the world’s energy system functioning smoothly — or whether the conflict evolves into a full-scale global oil shock.