India turns to Iran for oil and gas after 7-year hiatus, signaling limits to U.S. tilt
Indian liquefied petroleum gas (LPG) carrier Shivalik arrives at Mundra Port via the Strait of Hormuz amid the US-Israeli conflict with Iran in Gujarat, India, on March 16, 2026.
Amit Dave | Reuters
India has started buying oil and gas from Tehran after a seven-year gap, as it grapples with supply disruptions and rising energy prices triggered by the US-Israeli war against Iran.
The move to restart energy imports from Iran, the first purchase since 2019, is unlikely to draw immediate ire from Washington, but analysts say it underscores New Delhi’s attempt to rebalance ties with Tehran, according to energy intelligence firm Rystad Energy.
On Saturday, India’s Ministry of Petroleum and Natural Gas announced that Indian refineries crude oil supply assured from more than 40 countries, including Iran, amid disruptions caused by the Middle East conflict.
The ministry denied that refiners faced any payment hurdles for Iranian crude and said a ship carrying 44,000 metric tons of Iranian liquefied petroleum gas (LPG) had docked at a port in southern India.
“This is a confidence-building mechanism with Tehran,” Teneo’s South Asia consultant Arpit Chaturvedi told CNBC in an email, adding that the energy purchases act as an “insurance policy” to signal that India does not intend to take sides in the conflict.
In return, he said that India “expects cooperation from Iran” to ensure the safe passage of its ships through the Strait of Hormuz in the future.
India, the world’s third largest oil importer and second largest consumer of LPG, is largely dependent on supplies passing through the Strait of Hormuz. Approximately 50% of crude oil and most of LPG, the primary cooking fuel for residences and commercial establishments, pass through the strategic waterway.
“India is buying oil from Iran following a US waiver allowing the purchase of Iranian crude oil,” said Amitendu Palit, senior research fellow and research leader at the Institute of South Asian Studies. He added that future imports will depend on whether sanctions on Iranian oil will be reimposed and how the regional geopolitical situation develops.
Careful balancing act
Despite India’s long-standing ties with Tehran, public opinion suggests that New Delhi Since the beginning of the Middle East conflict, he has turned to Washington.
Meanwhile, 17 Indian-flagged ships are awaiting safe passage through the strait and seven ships have crossed the route in recent weeks following diplomatic contacts with Tehran. The move shows India drawing clear lines in its alignment with the US
“The assumption that the US is a reliable partner in times of crisis has been tested time and time again,” said Reema Bhattacharya, head of Asia research at Verisk Maplecroft, adding that India will likely diversify partnerships that will outlast the current conflict.
Last week, US President Donald Trump called on countries that depend on energy flows through the Strait of Hormuz to join a US-led maritime coalition to protect shipping in the waterway, saying “take it and cherish it” While pledging US support.
“Instead of joining the naval coalition proposed by Washington, India chose to hold bilateral talks with Iran for safe passage, a deliberate act of detachment,” Bhattacharya said. This reflects India’s energy pragmatism and reluctance to openly become involved in a conflict it did not choose.
The balancing act comes after the Trump administration last year imposed a 25 percent surcharge on Indian exports and accused New Delhi of financing Russia’s war in Ukraine by importing cheap crude oil from Moscow.
India has cut oil imports from Russia and increased purchases from the Middle East to secure a trade deal with Washington. But the outbreak of war disrupted these supplies, forcing India to turn to Russian crude due to tight global markets and rising fuel prices.
Kpler data shared with CNBC shows that India’s imports of Russian oil rose to about 1.9 million barrels per day as of March 24, from about 1 million barrels per day in February. Despite this, India’s energy purchasing costs have increased.
The average price of the Indian crude oil basket rose from $69 per barrel in February 2026 to $113 per barrel in March, Rystad Energy senior vice president Pankaj Srivastava told CNBC in an email.
