The US and Israel's attacks on Iran and disruptions to Hormuz Strait shipping continue to impact South Asia's energy markets. Although India has not experienced nationwide oil shortages domestically, natural gas and LPG supplies have already faced pressure, prompting the activation of emergency distribution and production increase mechanisms. Against this backdrop, India maintains oil and gas supply commitments to neighboring countries including Bangladesh, Nepal, Bhutan, and Sri Lanka, creating a unique policy dynamic characterized by "internal tightness and external stability." While ostensibly a regional supply assurance strategy under crisis conditions, this approach reveals deeper strategic considerations. A thorough analysis of India's policy rationale for sustaining external energy supplies amid domestic energy constraints not only helps clarify the true trajectory of South Asia's oil and gas risk diffusion but also reveals India's underlying efforts to shape regional order and elevate its strategic position through crisis management. This analysis holds practical reference value for assessing the evolving security landscape and geopolitical dynamics in South Asia.

I. Oil and Gas Shortages in India and Its Neighboring Countries

From India's perspective, while no nationwide oil shortage has emerged domestically, a structural supply deficit has taken shape. On March 3, the Ministry of Petroleum and Natural Gas publicly stated that energy supplies remained stable, with a 24/7 control center continuously monitoring national inventories and distribution networks. The government emphasized that India's diversified procurement sources for crude oil and refined products could partially offset potential disruptions from Middle East transportation bottlenecks in the short term. On March 9, Indian sources revealed no immediate plans to align with the International Energy Agency's unified reserve releases, noting that the strategic petroleum reserve system has a designed capacity of 5.33 million tons with current stocks at approximately 4 million tons, indicating sufficient supply capacity remains intact. In contrast, natural gas and liquefied petroleum gas (LPG) supplies have already reached critical levels: India's daily natural gas consumption stands at around 195 million standard cubic meters, with about half imported from the Middle East (approximately 60 million standard cubic meters/day). Following the Strait of Hormuz blockade and Qatar's declaration of force majeure, India activated emergency distribution mechanisms on March 10, ensuring 100% supply for residential propane gas (PNG) and vehicle compressed natural gas (CNG), 70% for fertilizer production, and 80% for industrial/commercial users. This demonstrates that actual pressure primarily lies in gas supply chains rather than retail fuel markets. On March 11, state-owned GAIL Corporation urgently purchased an Oman LNG carrier expected to arrive around March 15, further indicating that despite India's ongoing reassurances, concerns over gas supply gaps have entered a substantive mitigation phase.

As of March 11, among South Asia's smaller nations most severely impacted by U.S.-Israel's invasion of Iraq and disruptions to the Strait of Hormuz shipping routes, Bangladesh remains the most affected country, followed by Sri Lanka. Nepal and Bhutan have not yet experienced nationwide fuel supply cuts, but have seen LPG shortages, long queues, and panic buying. The Maldives primarily faces price shocks without physical fuel shortages. Specifically, Bangladesh has transitioned from market concerns to administrative supply restrictions, implementing daily gasoline and diesel purchase limits, natural gas rationing, and shutting down fertilizer plants while accelerating diesel and LNG imports. Although officials emphasize no full-scale fuel or power crisis, Reuters and local reports indicate garment factories and other industries are suffering from power outages and diesel shortages, with inventories only sufficient for short-term use. Sri Lanka exhibits a "fuel panic with gas shortages": gasoline and diesel supplies remain intact, with government claims of sufficient reserves to last about a month and increased distribution efforts, yet nationwide fuel queues persist. Household LPG shortages have persisted for weeks, directly impacting small businesses and residents, forcing the government to balance public reassurance with price hikes. In contrast, Nepal and Bhutan appear to be in fragile equilibrium. Nepal Petroleum Corporation stated on March 11 that gasoline and diesel supplies remain normal with uninterrupted cross-border oil transfers, and existing inventories could sustain operations for approximately 10 days under extreme conditions. However, LPG supplies for residential use in Kathmandu and other areas have remained tight, with local media reporting commercial stockpiling has displaced household gas consumption. This indicates Nepal's primary risk lies in bottled gas rather than the refined oil supply chain itself. In Bhutan, the government has issued statements to reassure the market, emphasizing sufficient fuel and LPG supplies while urging retail outlets nationwide to maintain full stock levels and maintain communication with Indian fuel suppliers. However, local media reports indicate that temporary LPG shortages and mass purchasing incidents in Thimphu and other areas highlight the country's heavy reliance on Indian imports. Should India's ongoing LPG supply constraints escalate, Bhutan could face rapid repercussions. Among the five nations, the Maldives has shown the least vulnerability. Both the government and economic ministers have repeatedly assured the public of no fuel or LPG shortages, noting that replenishment shipments are underway. Nevertheless, state-owned enterprises have significantly raised gasoline and diesel prices, reflecting imported price shocks rather than actual supply disruptions at this stage.

II. Oil and Gas Conditions in India's Aid to South Asian Small Countries

Amid these challenging circumstances, India has intensified its oil and gas supply support to other South Asian nations beyond the Maldives. Taking Bangladesh as an example, the country received diesel shipments through the India-Bangladesh Friendship Oil Pipeline between March 10 and 11. Bangladesh had already received 5,000 tons of diesel on March 9 and another 5,000 tons on March 11, with supplies originating from India's state-owned Numaligarh Refinery. The Indian side emphasized that this constitutes routine commercial energy trade rather than temporary political assistance. However, given Bangladesh's urgent needs for fuel procurement, transportation, and power generation amid Middle East conflicts, this supply has effectively addressed critical operational demands.

Regarding Nepal, on March 11, Nepal Petroleum Corporation (NPC) stated that its sole supplier, Indian Oil Corporation (IOC), had explicitly assured the Nepalese side that "there is no need for panic" and pledged to continue supplying liquefied natural gas (LNG) to Nepal based on demand, without any abrupt supply cuts. Earlier on March 3, NPC had publicly confirmed that petroleum product imports were "continuously transported via pipelines" and would remain uninterrupted even during the general election period.

From Bhutan's perspective, the Bhutan Trade Department held a series of bilateral meetings with India's three major state-owned oil companies—IOCL, BPCL, and HPCL—from February 10 to 13, focusing on strengthening oil supply security, improving logistics efficiency, and upgrading retail network infrastructure. Amid escalating tensions in the Middle East, the Bhutanese government has maintained contact with these four Indian public sector fuel suppliers, while Indian authorities have provided assurances regarding supply stability.

In Sri Lanka, following panic fuel queues triggered by the Iranian situation, the subsidiary of Indian Oil Corporation stepped in to reassure the market, stating that supplies remained ample.

III. India's Considerations

Firstly, India views ensuring stable supply to neighboring countries as integral to building its external security environment. From the perspective of Indian policymakers, the "Neighbourhood First" strategy is never merely about foreign aid, but rather about securing a stable, secure, and controllable regional environment for India's own development. The Indian Ministry of External Affairs has explicitly stated that this policy aims to establish a "regional framework conducive to stability and prosperity." Foreign Minister Sujesh further emphasized that India's investments in neighboring countries primarily serve the strategic interests of "starting from the nearest neighbor," noting that India effectively acts as a safety net for smaller neighboring states during crises. Therefore, even though India has activated emergency allocation mechanisms for LPG and natural gas supplies, it remains reluctant to abruptly cut off supplies to Bangladesh, Nepal, Bhutan, or Sri Lanka. This is because any fuel shortages in neighboring countries—leading to social unrest, logistical disruptions, or fiscal deterioration—could ultimately backfire on India through border tensions, trade volatility, and security spillovers.

Secondly, India leverages crises to reinforce its "first responder" image and safeguard regional credibility. In recent years, the country has consistently strengthened its position as the primary responder in South Asia and the Indian Ocean region. Amid the Middle East turmoil, despite facing energy supply pressures, India continues to supply oil to Bangladesh through the India-Bangladesh Friendship Oil Pipeline. Nepal Petroleum Corporation has publicly stated that Indian oil companies have assured there is "no need for panic." For India, maintaining uninterrupted energy supplies during crises represents not just an energy strategy but also a political credibility investment. The ultimate goal is to establish a stable perception among neighboring countries: when genuine crises arise, India remains the first responder ready to step in.

The third strategy involves transforming short-term supply guarantees into long-term structural dependencies while strengthening India-led regional energy networks. From India's official perspective, the significance of oil and power supply to neighboring countries extends far beyond emergency relief, aiming to integrate neighboring nations more deeply into India's cross-border energy infrastructure framework. Despite crisis conditions, India's persistent commitment to securing supplies to neighboring countries fundamentally seeks to convert temporary energy assistance into institutionalized, pipeline-based, and networked long-term partnerships. This approach will render neighboring countries increasingly reliant on India for fuel transportation, storage facilities, and energy coordination systems in the future.

Fourth, prevent China from expanding its influence during the vulnerable periods of neighboring countries and maintain India's strategic dominance in South Asia. Currently, continuing to ensure supply to Bangladesh, Nepal, Bhutan, and Sri Lanka is not merely about basic livelihood cooperation in India's view, but rather about preventing China from "taking advantage of vulnerabilities" in the most sensitive energy and infrastructure sectors, thereby further compressing India's influence space in the region.

Fifth, India implements supply guarantees by leveraging existing pipelines, contracts, and state-owned enterprise networks, which constitutes a cost-controlled strategic operation. Rather than unconditionally and extensively providing domestic scarce energy resources to neighboring countries, India primarily relies on established commercial contracts, cross-border pipelines, and state-owned oil company systems to maintain supply. This approach ensures relatively controllable marginal costs while generating substantial political benefits. Through limited, controllable, and commercialized external energy supplies, India achieves deeper policy trust, market dependence, and recognition of its pivotal role in regional energy infrastructure among neighboring countries.