India’s fossil fuel import bill has absorbed an additional estimated $22 billion because of the energy price shock triggered by the crisis around the Strait of Hormuz, according to the Centre for Research on Energy and Clean Air (CREA). The additional cost was accumulated between March and August 2026 as prices for crude oil, refined fuels and liquefied natural gas (LNG) moved substantially above levels implied by futures markets before the conflict.
India was the second-largest country-level recipient of the additional fossil-fuel import cost identified by CREA, behind China. Globally, fossil-fuel importers paid an estimated $330 billion more than pre-crisis expectations over the six-month period. The scale of the shock highlights India’s vulnerability to disruptions in a region that supplies a significant portion of its oil and gas requirements.
Hormuz Crisis Pushes Up India’s Energy Bill
CREA’s analysis compares actual fossil-fuel prices following the U.S.-Israel strikes on Iran with prices that futures markets had been forecasting before the conflict began. It estimates the additional payments made by importers for seaborne crude oil, oil products and LNG.
The analysis covers March through August 2026 and measures the additional financial cost caused by higher prices. It does not attempt to calculate the broader economic welfare loss from reduced consumption or fuel shortages.
For India, the estimated additional cost is approximately $22 billion, with some reports based on the same CREA analysis putting the figure at about $22.5 billion.
India’s Additional Fossil Fuel Cost
| Indicator | Estimate |
|---|---|
| Period covered | March-August 2026 |
| India’s additional import cost | About $22 billion-$22.5 billion |
| Global additional cost | About $330 billion |
| India’s global ranking | 2nd-highest |
| Country with highest additional cost | China |
| Approx. global monthly cost | $55 billion |
| Main fuels covered | Crude, oil products and LNG |
The difference between the $22 billion and $22.5 billion figures reflects reporting of the CREA estimate at different levels of rounding. CREA’s own report puts India’s gross additional cost at $22 billion.
India Faces High Exposure To Imported Energy
The financial impact is amplified by India’s dependence on overseas energy supplies.
India imports roughly 88%-90% of the crude oil it consumes. It also relies heavily on imports for LNG and LPG. A substantial share of supplies from major Gulf producers traditionally passes through the Strait of Hormuz, making disruption at the waterway particularly important for Indian refiners and energy companies.
The crisis has forced Indian refiners to diversify sourcing toward suppliers including Russia, the United States, West Africa and Latin America. However, alternative supply routes can involve longer voyages, higher freight costs and elevated insurance premiums.
India’s Fossil Fuel Import Dependence
| Energy Source | Approx. Import Dependence |
|---|---|
| Crude oil | About 88%-90% |
| LNG | About 50% |
| LPG | About 60% |
| Gulf share of crude imports | Historically substantial |
| Hormuz role | Major route for Gulf energy supplies |
This dependence means India cannot completely insulate its economy from international energy-price shocks even when physical supplies remain available.
Refined Fuels Have Seen An Especially Sharp Shock
The CREA study found that refined petroleum products experienced some of the steepest price increases during the crisis.
Diesel and gasoil prices averaged 59% above pre-war expectations during the six-month period. Gasoline was 43% higher, while crude oil was 35% higher. Jet fuel also increased by 59%.
LNG experienced an even larger increase in some markets, with prices averaging 75% above pre-crisis expectations in Asia and 60% higher in Europe.
Energy Price Shock
| Fuel | Price Increase Vs. Pre-War Expectations |
|---|---|
| Crude oil | 35% |
| Diesel/gasoil | 59% |
| Gasoline | 43% |
| Jet fuel | 59% |
| LNG – Europe | 60% |
| LNG – Asia | 75% |
The sharp increase in refined fuel prices is particularly important for India because diesel is deeply embedded in transportation, agriculture, logistics, construction and industrial activity.
Higher diesel prices can therefore spread through the economy even when consumers do not directly purchase large quantities of diesel.
Global Cost Reaches $330 Billion
The Indian impact forms part of a much larger global energy shock.
CREA estimates that fossil-fuel importers collectively paid about $330 billion more for seaborne crude, oil products and LNG during the six months following the strikes than they would have paid based on pre-war futures prices.
The European Union recorded the largest gross additional cost at $78 billion, followed by China at $35 billion and India at $22 billion.
Countries And Regions With Largest Additional Costs
| Importer | Gross Additional Fossil Fuel Cost |
|---|---|
| European Union | $78 billion |
| China | $35 billion |
| India | $22 billion |
| United States | Significant additional cost |
| Global importers | $330 billion |
The figure is a measure of additional spending rather than a calculation of net economic losses. Oil and gas exporters can benefit from higher prices, meaning the overall global transfer of wealth differs from the gross cost borne by importers.
Crude Oil Accounts For The Largest Share
Although refined fuels recorded some of the largest percentage price increases, crude oil remained the largest contributor to the global additional import bill.
CREA estimates that higher crude prices accounted for $164.1 billion of the $330 billion increase. Diesel and gasoil added $73.8 billion, gasoline contributed $35.7 billion, LNG added $38 billion and jet fuel accounted for $20 billion.
Breakdown Of The Global $330 Billion Shock
Crude oil $164.1 bn ███████████████████████████████
Diesel/gasoil $73.8 bn ██████████████
LNG $38.0 bn ███████
Gasoline $35.7 bn ███████
Jet fuel $20.0 bn ████
Other / rounding ~$-1.6 bn
The breakdown demonstrates that the crisis has affected the entire petroleum value chain rather than only the price of crude.
India’s Crude Import Bill Was Already Rising
The CREA estimate comes after India’s official data had already shown a substantial increase in energy import costs.
India’s crude oil import bill rose 81.5% year over year to $18.7 billion in May 2026, even though crude import volumes remained broadly stable. The Indian crude basket averaged $106.23 per barrel in May compared with $64.04 a year earlier.
For April and May combined, India’s crude import bill increased nearly 70% to $35.5 billion. The country’s net oil and gas bill rose 51.1% to $32.2 billion during the same period.
India’s Recent Import Cost Trend
| Metric | Latest Reported Figure |
|---|---|
| May crude import bill | $18.7 billion |
| YoY increase | 81.5% |
| May crude imports | 21.6 million tonnes |
| Indian crude basket, May 2026 | $106.23/barrel |
| Indian crude basket, May 2025 | $64.04/barrel |
| April-May crude import bill | $35.5 billion |
| April-May YoY increase | 69.85% |
| April-May net oil & gas bill | $32.2 billion |
These figures illustrate how quickly higher international energy prices can affect India’s external trade position.
Alternative Oil Supplies Are Cushioning The Shock
Indian refiners have responded by increasing purchases from alternative sources.
Russia has become particularly important. Recent Kpler data showed India’s Russian crude imports exceeded 2.6 million barrels per day in June and July, representing more than half of India’s total crude imports during those months.
India has also sought supplies from the United States, West Africa and Latin America. These alternatives can help maintain physical availability, but they do not necessarily eliminate the financial impact because longer shipping distances and higher freight and insurance costs can increase the delivered price.
The diversification strategy therefore reduces supply risk more effectively than it reduces the underlying price shock.
Hormuz Traffic Remains Below Normal
The crisis continues to affect energy flows through the Strait of Hormuz.
Kpler data cited by Reuters showed that Asia’s August crude imports were expected to average 23.12 million barrels per day, about 14% below the average for the three months before the conflict. India’s August crude arrivals were estimated at 4.51 million barrels per day, down from 5.07 million in July.
India’s Middle Eastern crude arrivals were estimated at 1.45 million barrels per day in August, only about half the pre-conflict average of 2.88 million barrels per day.
August Oil Flow Comparison
| Flow | Pre-Conflict Average | August 2026 | Change |
|---|---|---|---|
| Asia crude imports | 26.91 mb/d | 23.12 mb/d | -14% |
| India’s crude imports | — | 4.51 mb/d | Down from 5.07 mb/d in July |
| India’s Middle East crude imports | 2.88 mb/d | 1.45 mb/d | About -50% |
The data suggests that supply routes have not yet fully normalized, even though some traffic continues through the waterway. Reuters reported 10 visible commodity-vessel transits through Hormuz on August 26, below the 10-day moving average of about 15.
Clean Energy Is Already Reducing Exposure
One of the more significant findings in the CREA report is that countries with expanded clean-energy capacity have already avoided part of the fossil-fuel shock.
CREA estimates that clean-power generation capacity added since 2020 saved importing countries approximately $36 billion in fossil-fuel import costs during the first five months of the crisis.
The finding gives the energy transition a direct economic-security dimension. Solar, wind, nuclear power, electrification and energy efficiency can reduce the amount of imported fossil fuel required when international markets become disrupted.
At the same time, the current crisis has produced mixed results. Reuters reported that renewable generation is rising rapidly in several markets, while some Asian economies, including India, have also increased coal use to compensate for disrupted energy supplies.
Inflation And Current Account Risks
Higher energy prices can affect India through several channels.
The first is the current account. A larger oil and gas import bill increases the amount India spends overseas and can widen the trade deficit.
The second is inflation. Diesel, aviation fuel, gas and other energy products influence transportation and production costs across the economy.
The third is the rupee. A larger dollar requirement for energy imports can increase pressure on the domestic currency if export earnings and capital inflows do not offset the additional demand for foreign currency.
The fourth is fiscal policy. If the government chooses to shield consumers from higher fuel prices through tax reductions or other measures, some of the burden can shift toward public finances.
The Bigger Picture
The estimated $22 billion additional fossil-fuel cost for India demonstrates how quickly geopolitical disruption can translate into a major economic burden for an energy-importing country. CREA’s broader $330 billion estimate shows that the Hormuz crisis has produced one of the largest sustained energy price shocks in decades, with crude, diesel, LNG, gasoline and jet fuel all contributing to higher import bills.
For India, the episode reinforces the importance of energy diversification. Alternative crude supplies have helped maintain refinery operations, but they cannot fully eliminate the cost of higher global prices and transportation risks. The longer-term solution involves a combination of diversified oil and gas sourcing, strategic reserves, domestic production, electrification and faster deployment of renewable energy. CREA’s estimate that clean power added since 2020 has already avoided billions of dollars in fossil-fuel imports shows that energy transition investments can also function as a form of economic and geopolitical insurance.
Looking Ahead
The immediate outlook for India’s energy bill will depend heavily on whether traffic through the Strait of Hormuz returns toward normal levels and whether global crude and refined-fuel prices ease. August data still showed India’s Middle Eastern crude arrivals at roughly half their pre-conflict average, while Asian crude imports remained 14% below pre-conflict levels. Any renewed disruption could therefore add further pressure to India’s import costs.
Over the longer term, the crisis is likely to strengthen the case for reducing India’s exposure to imported fossil fuels. Greater use of renewable electricity, electric vehicles, domestic energy production and alternative supply routes can reduce the economic impact of future geopolitical shocks. However, oil and gas will remain important to India’s transportation, industrial and household energy needs for years, making diversification rather than an immediate exit from fossil fuels the more realistic near-term strategy.
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