Since Iran began restricting passage through the Strait of Hormuz in early March, India’s crude basket has surged from $69, to over $114 per barrel in April—a dramatic reminder of how exposed the world’s third-largest oil importer is to a single maritime choke point. India’s energy security directly depends on imported oil, liquefied natural gas (LNG), and liquefied petroleum gas (LPG), and the Hormuz crisis directly threatens affordable access to those hydrocarbons.
This fragility, however, presents an opportunity for US policymakers and industry to work with New Delhi to create a stronger, long-term energy partnership—one that would help diversify India’s energy supply chains away from problematic producers like Russia and Iran, benefit US energy producers and Indian consumers, and further a bilateral relationship that is key for the United States and for Indo-Pacific prosperity and stability.
India’s vital role in global energy supply chains
India is currently the world’s third-largest importer of oil, fourth-largest of LNG, and the second-largest importer of LPG. In addition, it is the world’s fourth-largest refiner and fifth-largest exporter of refined petroleum globally, making it a vital part of global oil and gas supply chains. This trend is set to continue, as the International Energy Agency estimates India will become the largest source of global oil demand growth between now and 2030. Currently, much of the feedstock for India’s domestic energy use and refined exports comes either through the Strait of Hormuz or from Russia, so supply shortages from those sources threaten India’s domestic and global contribution to energy security.
India’s dependence on the Middle East and Russia for hydrocarbons
Before restricted passage through the Strait of Hormuz began in early March, 45 percent of India’s crude oil imports, half of its LNG imports, and 90 percent of its LPG imports passed through the strait. Though historically a purchaser of Iranian oil, since the US snapback of sanctions on Iran in 2019, India has been purchasing increased quantities of oil from Iraq, Saudi Arabia, the United Arab Emirates, and Kuwait. India also sources large amounts of LNG from Qatar, the UAE, and Oman, while sourcing the majority of its LPG from the UAE, Qatar, Kuwait, Saudi Arabia, and Oman. Thus, the closure of the Strait of Hormuz is putting extreme pressure on Indian policymakers to find a way to replace, even if only temporarily, those constrained supplies.
One source they might have looked to is Russia; however, US tariffs and sanctions have made that an untenable long-term replacement option. In the aftermath of Russia’s invasion of Ukraine, under the G-7’s Russian Oil Price Cap scheme, Russian oil as a percent of India’s total imports climbed to a high of just over 33 percent between April 2022 and September 2025. The Biden administration and the European Union supported India’s purchases of discounted Russian crude as a means to limit global oil price volatility and avoid a shortage of refined petroleum products. However, the Trump administration’s reciprocal tariff regime levied duties as high as 50 percent on Indian goods — only reducing the rate to 18 percent in February 2026 under a bilateral trade framework that included Indian commitments to diversify energy supply away from Russia and increase purchases of US energy. In addition, expanded US sanctions on Russian producers—especially the November 2025 designation of Rosneft and Lukoil—have limited India’s ability to import Russian crude. Russian oil’s share of Indian crude imports dropped to under 20 percent in January 2026.
India found temporary relief: to stabilize global energy markets amid the war with Iran, the US Treasury Department issued short-term sanctions waivers to purchase Iranian and Russian oil already on the water. The Indian Oil Corporation purchasing its first Iranian cargo since 2019 in early April. Though Treasury Secretary Scott Bessant initially indicated the waivers would not be renewed, requests from around 10 nations led the administration to extend both. The Iran waiver has since expired without renewal, while the Russia waiver continues on a rolling monthly basis—most recently extended through mid-June. The uncertainty surrounding these temporary arrangements underscores India’s need to diversify toward more reliable long-term options.
US opportunity
Relations between Washington and New Delhi experienced significant turbulence in 2025—driven in part by US frustration over India’s continued purchases of Russian crude and the tariffs that followed. Yet India has signaled a genuine willingness to diversify away from Russia and Iran if viable alternatives exist. That presents a clear opportunity for US policymakers and industry. The February announcement of a framework for a US-India trade deal, with commitments to increase Indian purchases of US energy products, suggests there is meaningful room to expand US-Indian energy cooperation further. India’s one-year deal to import 2.2 million metric tons of LPG from the United States in 2026—the first structured contract for US LPG in the Indian market. To make the partnership durable, however, it will take proactive support from both sides.
From the US side, policymakers should explore actualizing the following:
- Continue to expand US LNG and LPG export agreements with India. The agreement mentioned above covers about 10 percent of India’s LPG demand. Longer-term LNG and LPG contracts at preferential or competitive pricing could increase that share, benefiting US providers while helping to diversify India’s suppliers and increasing its energy security.
- Operationalize the 2020 US-India Strategic Petroleum Reserve (SPR) Memorandum of Understanding. Signed under the Strategic Energy Partnership, this framework has never been implemented. India’s strategic petroleum reserves remain well below international standards—official Indian figures are higher, but the IEA estimates coverage as low as seven days, far short of its 90-day benchmark. The United States could support India’s Phase II SPR expansion through technical cooperation and development finance, while negotiating long-term US crude supply contracts to fill the expanded Indian reserves. This is a medium-term project, better suited for when markets stabilize—but initiating formal planning now would position both governments to move quickly once that happens.
- Support India’s non-Hormuz supply chain resilience. India has temporarily rerouted roughly 70 percent of crude imports away from the Strait of Hormuz, up from 55 percent—primarily by absorbing sanctioned Russian crude traveling through the relief granted by temporary US waivers. The durable structural fix, however, is expanding India’s capacity to receive and store non-Hormuz supply at scale: deepening port capacity at Mundra on India’s west coast—which launched India’s first terminal for very large crude carriers (VLCCs) in January 2026—and developing the long-haul maritime logistics partnerships with the Americas and West Africa that make those investments commercially viable. These measures create direct opportunities for US energy exporters, logistics firms, and development financiers regardless of regional political conditions.
Another structural shift could include the India-Middle East-Europe Economic Corridor (IMEC)—announced at the 2023 Group of Twenty in New Delhi and backed by India, Saudi Arabia, the UAE, Jordan, Israel, and the EU, with an explicit energy infrastructure pillar linking Indian ports to European markets via the Gulf. President Donald Trump personally endorsed the IMEC in February 2025. However, near-term progress faces real headwinds: UAE Gulf port infrastructure has been directly targeted in the current crisis, and IMEC’s Northern Corridor requires Israeli-Saudi normalization that has moved further away since the corridor was unveiled. But the Mundra port deepening, LNG terminal expansion, and IMEC connectivity investments have intrinsic value now and could be advanced incrementally—and accelerated as regional conditions allow.
Together, these three measures could help India permanently reduce its dependence on the Strait of Hormuz and Russia, while creating long-term opportunities for US energy producers and Indian consumers, and helping further a vital economic and security relationship for the United States.
Paul Stahle served as a senior energy advisor at the US State Department for 19 years, covering energy security, technology policy, and commercial diplomacy across Washington, DC, China, Europe, India, and the Asia-Pacific. He advises clients through Current Policy LLC on energy, geopolitics, and policy strategy.
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Image: LPG cylinders are pictured inside a truck outside a gas agency, in Manesar, Haryana, India, April 7, 2026. REUTERS/Bhawika Chhabra