The US and Israel have struck Iran. Iran has retaliated. And India, which imports nearly 90 percent of its crude oil, is now staring at an energy crisis it did not start but cannot avoid.
The Strait of Hormuz, a narrow waterway sitting largely within Iranian territorial waters, carries between 20 and 25 percent of the world’s daily crude supply. For India, roughly 2.5 to 2.7 million barrels per day sourced from Kuwait, Saudi Arabia, Iraq, and the UAE pass through this single corridor. Iran has already begun broadcasting warnings on VHF radio, telling ships they will not be allowed through.
What Disruption Means for Prices
If Iran’s 3.3 million barrels per day of production is disrupted, crude prices could rise between 9 and 15 percent, pushing the global benchmark from around $70 per barrel to between $76 and $81. Prices have already risen by around $10 per barrel since the strikes began.
India imports crude from over 40 countries and has diversified its sources across the US, West Africa, Russia, and Latin America. But after US pressure pushed India to reduce Russian oil purchases, India leaned harder on Gulf suppliers, deepening its exposure to exactly this kind of chokepoint risk.
US Sanctions Waiver
The US government has temporarily eased sanctions to allow India to buy Russian oil currently stranded at sea. US Treasury Secretary Scott Bessent described the 30-day waiver as a deliberate short-term measure to keep oil flowing in global markets.
Around 145 million barrels of Russian crude currently on the water could potentially be redirected toward Indian ports if commercial deals are finalised. Russian oil makes up an estimated 20 percent of India’s total imports. The waiver marks a notable shift not long ago, the Trump administration imposed 50 percent tariffs on India, including a 25 percent levy specifically for importing Russian oil.
However, analysts caution that the relief is limited. “The waiver does not fundamentally change India’s structural exposure to Middle Eastern supply flows,” said Sumit Ritolia, Lead Research Analyst at Kpler.
Economic Fallout
“Every time there is a crisis in the Middle East, India feels it in a very specific and material way,” said Dr. Kaushik Deb, Executive Director of the Energy Policy Institute at the University of Chicago (EPIC India). “We import nearly 90 percent of the oil we consume and now that we have dialled down our crude imports from Russia, almost half of those imports pass through the Strait of Hormuz today. Crude oil prices have risen by 15 percent or about $10 per barrel. This level of increase in crude prices could easily lead to domestic inflation rising by 0.5 percent.”
Every $10 per barrel rise in crude adds roughly $13 to $14 billion to India’s annual import bill, widens the current account deficit, and puts immediate pressure on the rupee.
India’s Prime Minister chaired an emergency Cabinet meeting. The Director General of Shipping has already advised all Indian seafarers, shipping companies, and trade unions not to deploy crews in Iran. The Gas Authority of India and Indian Oil Corporation have already begun reducing gas supplies to industrial customers. OPEC has signalled it will adjust production to stabilise markets, but with US President Donald Trump warning the war could stretch four to five weeks or longer, short-term fixes may not be enough.
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