Oil prices may move sharply if Strait of Hormuz disruption continues, says Essar CEO Prashant Ruia

Oil prices could remain volatile amid ongoing geopolitical tensions and disruptions linked to the Strait of Hormuz, with nearly one-fifth of global supply at risk and strategic reserves offering only limited relief, Essar Group CEO Prashant Ruia said, warning that the world has been caught unprepared for the scale of the current energy crisis.

Speaking on the sidelines of the India Today Conclave 2026, Ruia said that the conflict has exposed the vulnerability of the global energy system, especially for countries dependent on imports.

“Well, I think clearly a lot of people have been caught unaware, in the sense nobody expected this war to take the kind of direction it’s taking now, and the jury is out on how long it will last, but clearly many people will take quite a few learnings from this event, especially with regard to energy security, energy resilience, and the need for having more domestic manufacturing and storage, strategic storage, strategic reserves,” Ruia said.

He added that even short disruptions in supply can have a major economic impact.

“With just a short break in production or in capacity in any part of the world, it has a very massive impact on the economy. Apart from pricing, prices going up is obviously not good, but access and availability itself is in question, and I think that’s a massive learning for many countries which are reliant on imports,” he said.

Ruia said the biggest risk to oil prices currently depends on how long the Strait of Hormuz remains affected, as the route carries a large share of global oil and gas exports.

“I think a lot of it is dependent on how long the Strait of Hormuz will remain closed. The world is losing significant amount of gas production coming out of Qatar and nearly 20 million barrels of oil coming out of the Gulf countries. Now that’s nearly 20% of world production,” he said.

He noted that the supply shock is being partly managed through emergency reserves, but those buffers are limited.

“That is being compensated to some extent by the release of the strategic reserves. So if we are able to see the war or the Strait of Hormuz open up in the next couple of weeks, then I think it’s a contained situation. If it goes much longer than that then the jury’s out because the strategic reserves are also limited. It’s not like unlimited reserves,” Ruia said.

Prashant Ruia said the current crisis in West Asia is forcing countries to rethink energy security policies, including building larger reserves and increasing domestic production.

“The need for having larger strategic reserves is on every country’s calendar. I’m sure it’s in India’s agenda too. We do have some strategic reserves of oil, and there is a lot of talk within the government to increase those reserves,” he said.

Ruia added that fossil fuels will continue to remain central to the global energy system despite the push for transition. “We are very much still focused on oil and gas. It’s one of our core businesses, whether it’s production, refining, marketing, or distribution. Fossil fuels are going to be there for a long time, and people are reinvesting in this space,” he said.