India Diversifies Oil Imports as Hormuz Closure Pressures Economy

The Government of India is diversifying its crude oil imports to counter supply disruptions caused by military attacks launched by the United States and Israel against Iran on February 28. These attacks led to the functional closure of the Strait of Hormuz, severely restricting maritime traffic. To manage the shortfall, Indian refiners nearly doubled Russian oil imports in March to an average of 1.98 million barrels per day, supported by a temporary sanction waiver extended by U.S. President Donald Trump. India also increased imports from Angola and resumed shipments from Iran and Venezuela, though total crude imports still dropped from 5.2 million to 4.5 million barrels per day in March.

Economic pressure has mounted as Brent crude oil climbed above $100 per barrel, creating an energy tax effect that pushed the Indian rupee to record lows near 95. The Union Bank of India warned that these conditions keep inflation risks alive and pressure current accounts. In response, the government cut fuel excise duties to stabilize pump prices, while the Reserve Bank of India implemented tighter forex exposure caps and liquidity support. The Monetary Policy Committee has maintained the policy repo rate at 5.25% with a neutral stance. Despite these challenges, India's merchandise trade deficit narrowed to $20.7 billion in March 2026.