India is keeping its options open even as the global energy market tightens around it
As Washington ends its sanctions waivers on Russian and Iranian oil and a naval blockade chokes the Strait of Hormuz, the world's energy arteries are narrowing in ways that fall unevenly on those least responsible for the conflict. India, a nation of nearly 1.5 billion people that has quietly navigated between great-power rivalries by keeping its fuel affordable, now finds itself caught between American pressure and market forces it cannot control. The removal of discounted crude from sanctioned sources, combined with China's likely scramble for alternative supplies, threatens to push oil prices to levels that could weaken the rupee, widen trade deficits, and raise the cost of cooking gas for hundreds of millions of households. In the long human story of energy and empire, this moment asks whether smaller powers can preserve their economic sovereignty when the largest ones redraw the rules.
- The US has revoked sanctions waivers on Russian and Iranian oil while Iran's ports sit under a naval blockade, sending crude prices past $100 a barrel with no relief in sight.
- India faces a double blow: the discounted sanctioned crude it depended on for months has dried up, and China's scramble for replacement barrels will drive fierce competition in an already tight market.
- Nearly 90 percent of India's cooking gas transits the Strait of Hormuz, meaning an LPG shortage is no longer a distant risk but an approaching reality for ordinary households.
- Every $10 rise in crude could carve half a percent off India's GDP through a widened current account deficit, while the rupee risks sliding to a historic low of 95–97 against the dollar.
- Prime Minister Modi has appealed directly to Trump to keep the strait open, yet a sanctioned Russian LNG shipment is reportedly still en route to Indian ports — signaling that New Delhi is quietly preserving its options even under pressure.
On Wednesday, US Treasury Secretary Scott Bessent announced the end of sanctions waivers that had allowed Russian and Iranian oil to reach global markets under temporary exemptions — a return to Washington's "maximum pressure" posture. The announcement arrived at a particularly volatile moment: ceasefire talks over the Strait of Hormuz have collapsed, Iran's ports are under a US naval blockade that Tehran calls piracy, and crude prices have already crossed $100 a barrel. The removal of sanctioned supplies threatens to push them higher still.
For months, India had quietly relied on discounted Russian and Iranian crude — purchases the waivers made both legal and economically sensible. Those shipments helped contain domestic inflation and manage energy costs. Now the window has closed. Bessent confirmed that Washington will not renew the general license on Russian oil, and pressure on Iran will continue as long as the conflict does.
The threat to India runs deeper than the loss of cheap crude alone. China, the world's largest buyer of Iranian oil, will face its own supply disruptions and is expected to compete aggressively for alternative barrels in an already constrained market. Analysts estimate that every $10 increase in crude prices could expand India's current account deficit by roughly 0.5 percent of GDP. With nearly 90 percent of the country's cooking gas flowing through the Strait of Hormuz, an LPG crunch is a genuine near-term risk. The rupee, already under strain, could fall to between 95 and 97 against the dollar if elevated prices persist.
Prime Minister Modi spoke with President Trump earlier this week, stressing the importance of keeping the strait open. Yet India's posture remains carefully ambiguous. Despite Trump's past claims that Modi had committed to halting Russian energy purchases, India has never publicly confirmed any such pledge. Shipping data released Wednesday showed a Russian LNG tanker from the sanctioned Portovaya plant heading toward Indian ports — what would be the first such delivery since Trump made that assertion. India, it appears, is holding its options open even as the market tightens around it.
The United States has stopped allowing Russian and Iranian oil to flow into global markets under temporary exemptions, a decision announced Wednesday by Treasury Secretary Scott Bessent that marks a return to what Washington calls a "maximum pressure" approach. The timing could not be sharper: the Strait of Hormuz, the narrow waterway through which nearly a fifth of the world's oil and gas normally travels, sits under a de facto blockade after ceasefire negotiations collapsed. Iran's ports are now under a US naval blockade that Tehran characterizes as piracy. Crude prices have already climbed past $100 per barrel. The removal of sanctioned Russian and Iranian supplies from the market threatens to push them higher still, and few countries stand to lose more from that squeeze than India.
For months, India has relied on discounted oil from Russia and Iran—purchases that the waivers made legally possible and economically attractive. These supplies helped the country manage energy costs and contain inflation. The arrangement was never permanent; the waivers were always temporary buffers, allowing shipments loaded before mid-March to reach their destinations. Now those shipments are exhausted. Bessent confirmed that Washington will not renew the general license on Russian oil, and pressure on Tehran will persist as the conflict continues.
The danger to India operates on two levels. The direct loss of cheap Russian and Iranian crude is one problem. But the second may be larger. China, the world's biggest buyer of Iranian oil, will likely face supply disruptions of its own. When China turns to alternative sources to fill that gap, it will compete with India for the same barrels in an already tightening market. Analysts warn that every $10 increase in the price of crude could expand India's current account deficit by roughly half a percent of GDP. The country imports nearly 90 percent of its cooking gas through the Strait of Hormuz—an LPG crunch is now a real possibility. The rupee, already under pressure, could weaken to between 95 and 97 against the US dollar if elevated prices hold.
Prime Minister Narendra Modi spoke with President Trump earlier this week, emphasizing the importance of keeping the strait open. Yet India's position remains delicate. The country has never publicly confirmed any commitment to halt purchases of Russian energy, despite Trump's claims last year that Modi had made such an assurance. That ambiguity may reflect India's actual situation: the country needs energy, and it needs it at prices it can afford. A Russian liquefied natural gas shipment from the sanctioned Portovaya plant on the Baltic Sea is currently headed to Indian ports, according to shipping data released Wednesday. If it arrives, it would be the first such delivery since Trump's assertion about Modi's promise. India, it seems, is keeping its options open even as the global energy market tightens around it.
Citações Notáveis
We will not be renewing the general license on Russian oil. The earlier shipments have now been exhausted and pressure on Tehran will continue as the conflict drags on.— US Treasury Secretary Scott Bessent
Prime Minister Modi stressed the importance of keeping the Strait of Hormuz open in a call with President Trump.— Indian government officials (reported)
A Conversa do Hearth Outra perspectiva sobre a história
Why does the US decision to end these waivers matter so much right now, specifically?
Because the Strait of Hormuz is already blockaded. You're removing a safety valve from a system that's already under pressure. The waivers were letting some Russian and Iranian oil reach markets legally. Without them, supply shrinks just as the strait's disruption is already shrinking supply. It's a compounding effect.
But India doesn't buy that much Iranian oil directly, does it?
No, not compared to China. But that's almost the problem. When China gets squeezed out of Iranian supplies, it hunts for oil elsewhere—and India is hunting in the same markets. You end up bidding against each other for the same barrels at higher prices.
What's the rupee weakness actually mean for an ordinary Indian?
It means imports get more expensive. Your oil is priced in dollars. If the rupee weakens, you pay more rupees for the same barrel. And cooking gas—90 percent of India's LPG comes through that strait. A shortage there hits households directly.
Modi called Trump about keeping the strait open. Does that actually change anything?
It signals urgency and maintains the relationship. But Trump has already ordered the blockade. Modi's leverage is limited. What matters more is what India actually does—and right now, a Russian gas shipment is heading to Indian ports despite Trump's claims that Modi promised to stop buying Russian energy.
So Modi never actually made that promise?
India has never confirmed it publicly. And the actions suggest otherwise. India is keeping its options open because it has to. Energy security trumps diplomatic theater when your economy is on the line.