After facing months of energy shortages and uncertainty, India finds a chance to revive a vital energy partnership. Recent disruptions in supply due to ongoing conflicts and escalating energy prices left India, a significant importer of oil and gas, critically low on fuel reserves. A report by the Council on Energy, Environment, and Water, a New Delhi-based think tank, revealed that India had only nine to ten days of oil reserves left. In contrast, Japan and South Korea, which also rely heavily on Persian Gulf imports, held about 200 days’ worth of reserves.
If an initial agreement between the United States and Iran to reopen the Strait of Hormuz proceeds, allowing Iranian oil exports to rise, it could offer much-needed relief. Few nations could benefit as much as India from such an accord.
The Indian economy is frequently celebrated as the fastest-growing among major global economies. Despite this, it has faced growing pressure since the conflict began. Prime Minister Narendra Modi’s administration has warned of challenging times ahead, responding by raising fuel prices and limiting overseas spending. Immediate cooking gas shortages impacted households, while parts of the industrial sector began to shut down.
Iran previously stood as one of India’s key energy suppliers, with Iranian oil making up 14 percent of India’s crude imports in 2009, positioning Iran as the second-largest supplier. However, by 2019, New Delhi ceased Iranian oil imports under pressure from President Trump’s administration.
With current supply difficulties, India has limited choices and must seek oil from the lowest-cost sources available. Rajeev Lala, a director at S&P Global Energy in Gurgaon, India, noted, “We will take the cheapest barrel available, whether it is Russian or Iranian.” He emphasized India’s unique advantage in capitalizing on the return of Iranian crude.