West Asia conflict inflates India’s net oil, gas import bill by 43% in April-July

India depends on imports to meet over 88% of its crude oil requirement and about half of its consumption of natural gas, which is imported as LNG. Despite depending on imported oil and gas, India is a net exporter of petroleum products due to its massive refining capacity. The country also imports some petroleum products like liquefied petroleum gas (LPG).

Around 40% of India’s crude oil imports, 60% of its LNG imports, and 90% of its LPG imports came from West Asia through the strait. Apart from grappling with physical supply tightness due to the Strait of Hormuz crisis, the resultant surge in international prices forced India to import oil and gas at extremely high rates, as the country has been prioritising supply security over price considerations.

Oil import dependence flat through July

The country’s crude oil import bill surged by over 56% on a year-on-year (y-o-y) basis in April-July to $63.4 billion, even as import volumes rose slightly to 81.9 million tonnes — or about 600 million barrels — from 81.5 million tonnes, as per data from the Petroleum Planning and Analysis Cell (PPAC).

This translates to an average landed price of about $106 per barrel for imported crude in April-July, sharply higher than about $68 per barrel in the corresponding period of last year. The data shows that India’s dependence on imported oil for the four months ended July was 88.3%, almost flat on a y-o-y basis.

As for LNG imports, while supplies rose slightly — to 11,867 million standard cubic metres (mscm) in April-July from 11,269 mscm a year ago — the import bill rose by almost a fourth to $5.6 billion, reflecting the spurt in prices.

Petroleum product imports declined 45.1% in volume terms to 9.0 million tonnes, as supply of major petroleum products that India imports — like LPG — were impacted by the West Asia conflict. In value terms, the decline in petroleum product imports was relatively lower — down 26.3% to $5.6 billion — due to high international prices.

India’s petroleum product export volumes fell almost 18% y-o-y to 16.5 million tonnes in April-July as domestic fuel supplies were prioritised amid the global supply crunch. Nonetheless, exports surged almost 35% in value.

Impact of war on energy imports

Supply tightness, price surge due to import dependence

Energy imports are a major component of India’s overall imports, and any meaningful increase has ramifications for the country’s trade balance, current account, inflation, and the rupee’s exchange rate, among others. As India annually imports 1.8-2 billion barrels of oil, every $1-per-barrel increase in oil prices bumps up the country’s oil import bill by up to $2 billion on an annualised basis. As per PPAC data, crude oil imports in 2025-26 stood at over $122 billion. If oil prices sustain at $100 per barrel in the current financial year and import volumes don’t decline notably, the oil import bill could be upwards of $200 billion for the year.

According to a March report by Nomura, India is among the three most vulnerable Asian economies to high oil prices in terms of import bills and current account balances. It said that every 10% oil price increase typically widens India’s current account deficit by 0.4% of the GDP.

The June MoU between the US and Iran brought a sigh of relief for India and the global energy market, cooling prices and easing the pressure on supplies for a few weeks. But the renewed conflict in the Gulf following the pact’s effective collapse has emerged as a major concern as energy flows through the Strait of Hormuz crashed again.

Heavy dependence on energy imports has led to a double whammy of supply tightness and price surge. While highly diversified crude sourcing has helped in ensuring adequate oil, petrol, diesel, and jet fuel availability amid the West Asia crisis, some rationing of gas supplies to certain industries and commercial consumers was done in order to ensure adequate availability for households and a few priority sectors.