US-Israel-Iran war impact on India: The Donald Trump administration’s move ‘granting’ waiver to purchase Russian crude in lieu of the de facto closure of the Strait of Hormuz has important implications for India’s energy security. Around 90% of India’s crude oil is imported – and around 40-50% of India’s crude oil imports come from the Middle East, particularly after it substantially reduced purchases of Russian crude oil. This makes the impact of the currently stuck Middle East oil supplies significant – and any alternatives such as Russian crude important.Since the start of the Russia-Ukraine war, India had emerged as the largest buyer of Russian seaborne crude oil. In August last year, the Trump administration levied a 25% penal tariff that was linked to India’s imports of crude oil from Russia. The finalisation of the India-US trade deal was also linked to India stopping Russian crude oil procurement.After US sanctions on Russian oil majors Rosneft and Lukoil, Indian refiners started scaling back these purchases. This helped India secure a trade deal with the US, under which tariffs on New Delhi were reduced to 18%. However, with the US Supreme Court verdict striking down Trump’s tariffs, the trade deal is yet to be finalised.It’s important to note that India has never said that it will stop procuring Russian crude. The US lifted the 25% penalty tariff on India for Russian crude in February. The Trump administration said that lifting of the tariff was contingent on India completely stopping Russian crude oil buys, which the US has claimed helps indirectly finance Russia’s war against Ukraine.
On its part, India has maintained that its decisions to buy crude oil will be guided by the country’s energy security interests and wherever cheaper crude options are available. But, the fact remains that Russian crude oil buys have been declining.And now, with the supply of crude oil from the Middle East taking a hit, India has been scouting for alternatives. Russia had already conveyed willingness to step up supply of crude to India to help it meet oil needs. The US waiver has provided immediate relief, say analysts, though the fundamental vulnerability remains.
Russian crude oil: US Waiver For India
US Treasury Secretary Scott Bessent posted on social media platform X (formerly Twitter): “President Trump’s energy agenda has resulted in oil and gas production reaching the highest levels ever recorded. To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil. This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea.“India is an essential partner of the United States, and we fully anticipate that New Delhi will ramp up purchases of US oil. This stop-gap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage.”
How long does the waiver last? As per the Department of Treasury’s statement, “all transactions prohibited…that are ordinarily incident and necessary to the sale, delivery, or offloading of crude oil or petroleum products of Russian Federation origin loaded on any vessel..on or before 12:01 a.m. eastern standard time, March 5, 2026 are authorized through 12:01 a.m. eastern daylight time, April 4, 2026, provided that the delivery or offloading of such crude oil or petroleum products occurs at a port in India and the purchaser of such crude oil or petroleum products is an entity organised under the laws of India.”
Importance of Strait of Hormuz & India’s Strategic Reserves
The Strait of Hormuz in the Persian Gulf is an extremely important passageway that allows for transit of merchandise and oil carrying ships. Most of the oil that goes through the Strait of Hormuz heads to Asia, with China and India as major beneficiaries. The Strait of Hormuz has not been officially closed according to Iran – however some tankers transiting through it have been attacked. Hence several ships remain stuck in the area with potential danger of being attacked.
As per estimates anywhere between 20-25% of the global oil makes its way through the Strait of Hormuz. The Strait of Hormuz is just 21 nautical miles wide at its narrowest point. The shipping lanes are even narrower – make the risk of going through it even higher in the current scenario.According to a PTI report, India is also seeking to secure marine cover from the US for vessels to ferry oil from the Middle East. The government has sought to quell fears of shortages saying that there are enough stocks to meet immediate needs. Oil minister Hardeep Singh Puri has said that India’s crude stocks can last 25 days and petrol and diesel stocks can last another 25 days. This is apart from the volume that is available in strategic reserves. This takes the cover to around 8 weeks.“We are in a comfortable position right now,” a government official has said. Additionally, while oil flows from the Middle East are currently stuck, those from West Africa, Latin America and the US continue.
What US waiver means for India
A Bloomberg report had already suggested that vessels carrying Russian crude were diverted early this week and had started docking at Indian ports. Around 15 million barrels of crude oil are within easy reach for India, allowing for immediate purchases. Another report by Reuters says that Indian refiners are buying millions of barrels of spot Russian crude that is immediately available.According to Sumit Ritolia, Lead Research Analyst, Refining and Modelling at Kpler, with nearly 50% of India’s crude imports transiting the Strait of Hormuz, the country remains highly exposed to potential supply disruptions.“The US waiver allowing additional purchases of Russian crude over baseload offers short-term relief, though competition from Chinese buyers for the same barrels could limit the extent of India’s benefit,” Ritolia said.Since the start of the crisis last weekend, Kpler a global real-time data and analytics provider has been saying that India can easily pick up readily available Russian oil on the sea.
Ritolia is of the view that the waiver by the Trump administration does not fundamentally change India’s structural exposure to Middle Eastern supply flows.“Indian refiners had already been importing around 1 mbd of Russian crude in recent months, meaning the waiver effectively acts as a green signal to lift volumes above this base load, particularly for cargoes currently delayed across key shipping routes, he explains.As of early March, approximately 145 million barrels of Russian crude remain on the water, including significant volumes across the Indian Ocean, Red Sea/Suez routes, and around Singapore, which could potentially be redirected toward Indian ports if commercial deals are finalised, says Kpler.“With the waiver now in place, refiners could quickly resume purchases, potentially pushing Russian inflows around 1.6 to 2 mbd in the near term. While this provides a short-term logistical buffer, it cannot fully offset India’s almost 2.6 mbd exposure to Middle Eastern crude, and competition from Chinese buyers for the same Russian barrels will limit the upside,” Ritolia adds.
Kpler says that for Indian refiners, renewed access to Russian crude would support feedstock security and margins. “In the near term, refiners are likely to prioritise domestic fuel availability and comfortable stock levels, meaning the increase in crude availability may not immediately translate into higher product exports. Export flows would likely rise only once domestic requirements are satisfied,” it says.“From a market perspective, the policy shift could also tighten the availability of Russian export barrels globally. As Indian refiners re-enter the market for these grades, the deep discounts previously associated with Russian crude could narrow significantly, and prompt cargoes may even trade at premiums if competition for available barrels intensifies,” Ritolia concludes.
Brent crude prices have surged 16.4% this week since the start of the US-Iran war and are set for the steepest weekly climb since the Russia-Ukraine war started. The rising crude oil prices also has implications for India.As Amitabh Kant, the former CEO of Niti Aayog pointed out: Every $10 per barrel rise in crude prices can add $13-14 billion to India’s annual import bill, widen the current account deficit and pressure the rupee.The immediate availability of Russian crude may hence not only help meet supply needs, but also help keep India’s crude oil bill somewhat in check.
