Does India Import Oil From Iran? Unpacking A Complex Energy Relationship

Mr. Jovani Bode 18 Jun 2025

The global energy landscape is a complex web of geopolitics, economic imperatives, and strategic alliances. Few relationships exemplify this intricacy better than India's historical and evolving stance on crude oil imports, particularly from nations like Iran. For a rapidly developing economy like India, securing stable and affordable energy supplies is not merely an economic concern but a matter of national security and sustained growth. This article delves deep into the question: does India import oil from Iran, examining the historical context, current realities, and the geopolitical forces shaping this crucial energy dynamic.

India, one of the world's largest and fastest-growing energy consumers, relies heavily on imports to meet its insatiable demand. Its energy security strategy involves diversifying its import basket to mitigate risks associated with over-reliance on any single region or supplier. This diversification has led to significant shifts in its import patterns over the years, with implications that resonate across global markets and diplomatic corridors. Understanding India's energy import strategy, especially concerning countries like Iran, offers critical insights into its foreign policy and economic resilience.

The Current Status: A Clear Shift Away
A Look Back: Iran as a Key Supplier to India
The Impact of US Sanctions: A Game Changer
India's Diversification Strategy: Spreading the Net Wide
Geopolitical Crossroads: Middle East Conflicts and India's Energy Security
The Russia-Iran Nexus: A Shifting Balance for India
Economic Implications for India: Beyond Direct Imports
Future Outlook: What Lies Ahead for India-Iran Oil Trade?

The Current Status: A Clear Shift Away

The straightforward answer to the question, **does India import oil from Iran** currently, is largely no. India has officially ended all oil imports from Iran. This significant shift was confirmed by India’s Ambassador Harsh Vardhan Shringla, who stated that India stopped importing oil from Iran after the United States refused to extend exemptions from sanctions earlier in the month. This marks a definitive break from a long-standing energy relationship, primarily driven by external geopolitical pressures. As of now, India does not import crude oil from Iran due to US sanctions. This cessation is a direct consequence of the US administration's policy to reduce Iran's crude oil exports to zero, which involved ending waivers on May 2 that had allowed top buyers of Iranian oil, including India, to continue their imports for six months. This decision effectively compelled India to cease its purchases, despite its historical reliance on Iranian crude. While the direct crude oil imports have ceased, it's worth noting the broader trade context. India imports from Iran were US$1.06 billion during 2024, according to the United Nations COMTRADE database on international trade. This figure, however, reflects overall trade and does not specifically detail crude oil, which has been halted. For context, India imports from Iran of crude oil was US$2.82 billion during 2019, illustrating the significant decline in energy-related trade following the sanctions. Even though India does not directly import large volumes of oil from Iran, its overall trade relationship continues, albeit without the once-dominant crude component.

A Look Back: Iran as a Key Supplier to India

Before the imposition of stringent US sanctions, Iran was a vital component of India's energy security strategy. For many years, Iran was one of India's top three sources of crude oil. This historical reliance was strategic for several reasons. Iran offered competitive pricing, favorable payment terms, and geographical proximity, which reduced shipping costs and transit times. Its vast oil reserves provided a reliable source for India's growing energy needs.

Pre-Sanction Prominence and Strategic Importance

The data clearly shows Iran's significance. Iran was the third biggest source before the ban in FY19. This position highlights the depth of the energy relationship between the two nations. India's refineries were often configured to process Iranian crude, which is known for its specific characteristics. This made Iranian oil a preferred choice for many Indian refiners, contributing to the stability of India's refining sector. The long-standing trade ties also fostered a broader economic relationship, extending beyond just oil. The ability to pay in Indian rupees for a portion of the oil imports also provided a crucial mechanism for trade, circumventing some international financial restrictions in earlier sanction regimes.

Shifting Import Patterns and Diversification Efforts

However, even before the complete cessation of imports, India had begun to diversify its oil sources in response to earlier rounds of sanctions and the inherent volatility of the Middle East. While Iran remained a significant supplier, India actively sought to reduce its over-reliance. This proactive diversification laid the groundwork for the more drastic shift seen today, demonstrating India's foresight in anticipating potential disruptions to its energy supply chains. This strategic foresight has proven invaluable in navigating the current geopolitical climate.

The Impact of US Sanctions: A Game Changer

The primary reason India no longer imports crude oil from Iran is the stringent US sanctions. The United States' policy to reduce Iran's crude oil export to zero effectively pressured countries like India to cease their imports. This was achieved by ending waivers that had allowed top buyers of Iranian oil, including India, to continue their imports for six months. Shringla said India has stopped importing oil from Iran after the United States refused to extend exemption from sanctions earlier this month. This move was a critical inflection point, forcing India to re-evaluate its energy procurement strategy entirely. The US sanctions operate on an extraterritorial basis, meaning they can penalize entities in third countries that engage in transactions with sanctioned Iranian entities. For a country like India, which has significant economic ties with the US and relies on the international financial system dominated by the dollar, defying these sanctions carries substantial risks. These risks include potential restrictions on access to the US financial system, penalties on Indian companies, and broader diplomatic repercussions. Therefore, despite the historical advantages of Iranian oil, compliance with US sanctions became a necessary, albeit challenging, decision for India.

India's Diversification Strategy: Spreading the Net Wide

In the absence of Iranian crude, India has significantly ramped up its efforts to diversify its oil import sources. This strategy is not new but has gained renewed urgency. India currently imports oil from around 40 different countries. This extensive network of suppliers is a testament to India's commitment to energy security and its ability to adapt to changing geopolitical realities. Key players in India's current import basket include Russia, Iraq, Saudi Arabia, Abu Dhabi, and the USA. The Middle East remains a key region for India's energy imports despite growing Russian supplies. This indicates a balanced approach, leveraging traditional suppliers while exploring new avenues. India imports about 80 percent of its oil requirement from these countries, highlighting its deep dependence on global oil markets. More broadly, India imports 85 per cent of its oil demand through imports from various countries, underscoring the critical nature of its diversification efforts.

New Partnerships and Shifting Dynamics

The most notable shift in recent times has been the dramatic increase in imports from Russia. India’s insatiable oil and gas demand is pushing it closer to Russia and Iran, though the "closer to Iran" part refers more to geopolitical alignment than current oil imports. The surge in Russian oil imports, often at discounted prices following Western sanctions on Russia, has provided a crucial alternative for India. This strategic pivot has allowed India to maintain its energy security while navigating the complexities of global energy politics.

Balancing Acts and Geopolitical Implications

Reflecting the current geopolitical realities, India’s position on Iran’s oil import vastly differs from its position on Russia. One of the initial inflection points between New Delhi and the Western capitals since the start of the Ukraine crisis was a wish for India to take a few steps back with regard to its relations with Moscow. However, India has largely maintained its stance, prioritizing its energy security and national interests. This pragmatic approach highlights India's growing assertiveness on the global stage, balancing its relationships with various powers to serve its strategic objectives.

Geopolitical Crossroads: Middle East Conflicts and India's Energy Security

Even though India does not directly import large volumes of oil from Iran anymore, the ongoing conflicts in the Middle East, particularly between Israel and Iran, have significant implications for India's energy security. Experts pointed out that India's crude imports from Iran are almost negligible, yet the broader regional instability remains a concern. The conflict between Israel and Iran has already disrupted the oil market, pushing crude prices higher.

The Strait of Hormuz Vulnerability

A major concern is the potential disruption of crucial oil and gas imports via the Strait of Hormuz. This narrow waterway, through which a significant portion of the world's oil supply passes, is a critical chokepoint. Any major escalation or disruption in this region could lead to higher oil prices, increased inflation, and economic instability in India. Given that the Middle East remains a key region for India's energy imports, despite growing Russian supplies, the stability of this region is paramount for India's economic well-being. The vulnerability of global supply chains, even without direct Iranian oil imports, underscores the interconnectedness of the global energy market and the ripple effects of regional conflicts.

The Russia-Iran Nexus: A Shifting Balance for India

India's energy strategy is increasingly characterized by a complex balancing act, particularly concerning its relations with Russia and Iran. While the direct answer to **does India import oil from Iran** is currently no, the broader geopolitical alignment and India's long-term energy needs suggest a nuanced approach. India’s insatiable oil and gas demand is pushing it closer to Russia and Iran, not necessarily in terms of current oil imports from Iran, but perhaps in terms of strategic dialogue and diversification of political ties away from exclusive Western dependence. The table lists the % share of a country in India’s total crude oil imports, and Iran was the third biggest source before the ban in FY19. Currently, most of India’s oil is being imported from a diverse set of countries, with Russia emerging as a significant new player. This contrasts sharply with India's constrained ability to import from Iran due to sanctions. This divergence highlights India's pragmatic foreign policy, where energy security often takes precedence, leading to different approaches for different geopolitical situations.

Economic Implications for India: Beyond Direct Imports

The cessation of oil imports from Iran has several economic implications for India, even if it has managed to diversify its sources. Historically, Iranian oil offered certain advantages, including proximity and sometimes more flexible payment terms. Losing this source means India has to rely more on other, potentially more expensive or geopolitically sensitive, suppliers. Higher global oil prices, triggered by regional conflicts or supply disruptions, directly impact India's economy. Since India imports about 80 percent of its oil requirement, any significant increase in crude prices can lead to higher import bills, increased inflation, and a strain on its current account deficit. The conflict could disrupt crucial oil and gas imports via the Strait of Hormuz, leading to higher oil prices, increased inflation, and economic instability in India. These factors underscore why India's energy security is deeply intertwined with global stability, even when it does not directly **import oil from Iran**.

Broader Trade Relations with Iran and Israel

As far as trade is concerned, India has a sizable trade with both Iran and Israel. This dual engagement reflects India's independent foreign policy, aiming to maintain strategic autonomy and economic interests. While oil trade with Iran has ceased, other forms of trade continue. India imports from Iran was US$1.06 billion during 2024, according to the United Nations COMTRADE database on international trade. This includes non-oil commodities and services. Concurrently, India enjoys a positive balance of trade with Israel, exporting diesel and polished diamonds and importing rough diamonds, electronics and telecom components like chips, and parts of photovoltaic cells, in addition to potassium chloride and fertiliser and herbicide. This multi-faceted engagement with different regional powers highlights India's pragmatic approach to international relations, where economic interests and strategic partnerships are carefully balanced.

Future Outlook: What Lies Ahead for India-Iran Oil Trade?

The future of India's oil imports from Iran remains uncertain and largely dependent on geopolitical developments, particularly the trajectory of US sanctions. While India has officially ended all oil imports from Iran, the possibility of resumption hinges on a significant shift in US policy or a new international agreement regarding Iran's nuclear program. India's energy demand is only set to grow, and its strategic imperative will always be to secure diverse and affordable energy sources. If sanctions were to be lifted or significantly eased, Iran could once again become an attractive option for India dueating its historical role as a reliable supplier and its geographical advantages. However, for the foreseeable future, as long as US sanctions remain in place, India is unlikely to resume significant crude oil imports from Iran. Its current strategy of broad diversification and reliance on a multitude of suppliers, including increased imports from Russia, appears to be the established norm. The ongoing conflict between Israel and Iran is not expected to have a significant impact on India's crude oil imports, as experts pointed out that India's crude imports from Iran are almost negligible, reinforcing the current reality.

Conclusion

In conclusion, the answer to the question, **does India import oil from Iran**, is currently no. India has officially ceased all crude oil imports from Iran due to stringent US sanctions, marking a significant departure from a long-standing and mutually beneficial energy relationship. This shift has compelled India to accelerate its diversification strategy, leading to increased reliance on a broad array of suppliers including Russia, Iraq, Saudi Arabia, and the USA. While direct oil imports from Iran have stopped, the broader geopolitical landscape, including conflicts in the Middle East and the vulnerability of crucial shipping lanes like the Strait of Hormuz, continues to impact India's energy security and economic stability. India's pragmatic foreign policy, balancing its energy needs with complex international relations, underscores its growing assertiveness on the global stage. The future of India-Iran oil trade remains contingent on evolving geopolitical realities, but for now, India's energy tapestry is woven from a diverse set of threads, excluding the once prominent Iranian crude. What are your thoughts on India's energy diversification strategy? Do you believe India will resume oil imports from Iran in the future? Share your insights in the comments below, and don't forget to explore our other articles on global energy dynamics and India's economic policies.

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