The Brent crude oil price chart from the past week is displayed on a mobile screen in this photo illustration, as prices fluctuate amid escalating conflict involving Iran and concerns over global supply disruptions in Brussels, Belgium, on March 2, 2026.
Jonathan Raa | Nurphoto | Getty Images
India, even as it tilts towards the U.S., is increasingly finding that Washington’s policies work to its detriment, particularly in matters of energy security. The Iran war has only exacerbated the issue.
On Monday, the U.S. began blocking ships from entering or exiting Iranian ports via the Strait of Hormuz — one of the world’s most critical oil chokepoints — in a bid to pressure Tehran after peace negotiations collapsed.
Experts said the move dealt a blow to New Delhi, which had just imported its first Iranian oil shipment in seven years as it scrambled to meet energy needs amid the Iran war. Compounding the strain, a U.S. waiver allowing countries to buy Russian crude expired on April 11, removing another key source of energy supply as global markets remain tight.
Mukesh Sahdev, chief oil analyst at energy intelligence firm XAnalysts, told CNBC that India is facing a mounting supply squeeze “with the loss of Iranian barrels, plus not getting the Russian barrels.”
India imports more than 85% of its crude oil requirements — around 5.5 million barrels per day — making it the world’s third-largest oil importer. According to Sahdev, the country has already lost about 3 million barrels per day of crude that previously transited through the Strait of Hormuz, forcing refiners to scramble for alternative supplies, particularly from Russia.
India is in a far more fragile position if disruptions to its crude supply persist, Sahdev said, adding that, unlike China — which holds around 300 days’ worth of oil reserves — India has reserves of roughly 160 million barrels, representing only a limited buffer of around 30 days against prolonged supply shocks.
While fuel pumps are not running dry, the impact of the Middle East conflict is already visible in key macroeconomic indicators. Last month, HSBC’s flash Purchasing Managers’ Index showed that India’s private sector activity in March slowed to its lowest level since October 2022 due to softer domestic demand.
Companies surveyed cited the Middle East conflict, unstable market conditions, and intensifying inflationary pressures as factors weighing on growth. A few days later, India’s finance ministry also issued a warning that its growth forecast of 7.0%–7.4% for the financial year ending March 2027 faces “considerable downside” risk due to rising energy costs and supply chain disruptions linked to the Iran war.
Strategic autonomy?
The current crunch underscores a broader challenge for India as it tries to balance its economic and energy needs with U.S. strategic expectations. New Delhi has long championed strategic autonomy, especially in energy security, but recent U.S. actions have increasingly constrained its room for maneuver, experts said.
Last year, Washington imposed an additional 25% tariff on Indian exports and accused New Delhi of indirectly funding Russia’s war in Ukraine by importing discounted Russian crude. In an effort to secure a trade deal with the U.S., India subsequently cut back on Russian oil purchases and ramped up imports from the Middle East.
That strategy unraveled after the outbreak of war in the region disrupted Middle Eastern supplies, pushing India back toward Russian crude amid rising fuel prices and tight global markets — only for the U.S. waiver to lapse this month.
“I feel bad for the Indian government,” said Samir Kapadia, managing principal at the Vogel Group, speaking on CNBC’s Inside India. Indian policymakers, he added, are frequently being told by Washington whether they can or cannot buy energy supplies from Russia or Iran.
“They’re on a seesaw right now, trying to balance the expectations of the United States,” Kapadia said. “There is no easy out for India.”
According to data shared by energy intelligence firm Rystad Energy, India bought 1.5 million barrels per day of Russian crude in March, after the U.S. offered it a specific 30-day waiver allowing it to resume purchases. A week later, Washington temporarily authorized all purchases of Russian oil stranded at sea to stabilize energy markets, suspending sanctions imposed after Russia invaded Ukraine.
That authorization expired on April 11, and experts say the lapse could push oil prices higher, potentially forcing Washington to extend the waiver in an effort to cool markets.
“The market is already squeezed, and India is expecting that this waiver will get extended,” said Pankaj Srivastava, senior vice president at energy research firm Rystad Energy.
For now, the government is seeking to play down immediate risks. On Monday, the Ministry of Petroleum and Natural Gas said that “all refineries were operating at high capacity and that crude inventories were adequate.” The ministry did not respond to CNBC’s requests for further comment.
