India’s economic rise rests on a simple but fragile foundation: uninterrupted access to affordable energy. Today, that foundation is increasingly exposed to geopolitical tremors in West Asia.
By sharply reducing imports of discounted Russian crude and increasing purchases from Gulf producers and the United States, New Delhi has altered not just its supplier mix — but its risk profile. The result is a growing dependence on one of the world’s most volatile energy choke points: the Strait of Hormuz.
Nearly half of India’s crude oil imports and a majority of its LNG shipments pass through this narrow maritime corridor between Iran and Oman. The vulnerability is even sharper for LPG, the cooking fuel that directly touches millions of households. A substantial share of India’s LPG supply is sourced from Gulf producers and must transit Hormuz. Unlike crude oil, India maintains no large strategic reserve of LPG, making it acutely sensitive to even short-term shipping disruptions.
From Price Risk to Supply Risk
After 2022, India emerged as one of the largest buyers of discounted Russian oil, capitalizing on geopolitical dislocation to secure lower import costs. That strategy helped cushion inflationary pressures and stabilize the current account.
However, geopolitical alignments and sanctions dynamics have complicated that equation. As tensions intensified between Iran and Israel — with U.S. backing under leaders such as Donald Trump and Israel’s Benjamin Netanyahu — the regional security environment became more combustible. Under diplomatic and trade pressures, India recalibrated its crude sourcing.
But energy trade is never just about barrels; it is about routes.
By trimming Russian imports and deepening Gulf dependence, India effectively exchanged a price risk (loss of discounted oil) for a supply-route risk (concentration through Hormuz). In times of stability, that trade-off may appear manageable. In times of conflict, it becomes precarious.
The Economic Multiplier of Oil Shocks
For a net energy importer like India, oil price spikes ripple quickly across the economy. A sustained $10 increase in global crude prices can significantly expand India’s annual import bill, widen the trade deficit, weaken the rupee, and add to inflationary pressures.
Higher energy prices feed directly into transport costs, manufacturing input prices, fertilizer subsidies, and household cooking fuel. The Reserve Bank of India may then face tighter monetary choices, even if domestic demand weakens.
Energy volatility thus becomes macroeconomic volatility.
The China Contrast
India’s strategic discomfort becomes more pronounced when viewed alongside China. Beijing has invested heavily in overland energy infrastructure, including pipelines linking it directly to Russian oil and gas fields. While China also imports from the Gulf, its land-based routes reduce exclusive reliance on maritime choke points.
In a prolonged Hormuz disruption, China could scale up pipeline imports from Russia. India, by contrast, remains overwhelmingly dependent on sea-borne supplies.
Energy routes, not just diplomatic alignments, determine strategic resilience.
The Strategic Question
None of this suggests that India’s foreign policy choices are simple or cost-free. Avoiding sanctions exposure, preserving access to Western capital and technology, and maintaining diversified diplomatic relationships are legitimate objectives.
But energy security demands structural hedging:
Expanded strategic petroleum reserves
Creation of LPG buffer stocks
Diversification toward Africa and Latin America
Faster renewable deployment
Long-term LNG contracts with route flexibility
Greater naval and shipping insurance preparedness
The Strait of Hormuz has long been a global vulnerability. What has changed is India’s degree of exposure to it.
Autonomy in an Age of Blocs
As geopolitical blocs harden, middle powers face narrowing maneuvering space. For India, the challenge is not choosing sides — it is ensuring that strategic alignment does not create economic fragility.
Energy security is not built on diplomatic warmth or personal rapport between leaders. It rests on diversification, redundancy, and resilience.
In a world where distant conflicts can ignite oil shocks overnight, the most powerful foreign policy is one that keeps the lights on at home.
Policies & Ideas 