India turns to Iran for oil and gas after 7-year hiatus, signaling limits to U.S. tilt

India has begun buying oil and gas from Tehran after a seven‑year hiatus as it grapples with supply disruptions and elevated energy prices triggered by the U.S.-Israel war on Iran.

The move to resume Iranian energy imports — the first purchases since 2019, according to energy intelligence firm Rystad Energy — is unlikely to draw immediate ire from Washington, but analysts say it underscores New Delhi’s attempt to rebalance ties with Tehran.

On Saturday, India’s Ministry of Petroleum and Natural Gas said Indian refiners had secured crude supplies 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 vessel carrying 44,000 metric tons of Iranian liquefied petroleum gas (LPG) had berthed at a southern Indian port.

“It’s a confidence‑building mechanism with Tehran,” Arpit Chaturvedi, South Asia advisor at Teneo, told CNBC in an email, adding that the energy purchases act as an “insurance policy,” signaling that India does not intend to take sides in the conflict.

In return, India “expects cooperation from Iran” to ensure the safe passage of its ships through the Strait of Hormuz in the future, he said.

India, the world’s third‑largest oil importer and second‑largest consumer of LPG, is heavily dependent on supplies transiting the Strait of Hormuz. About 50% of its crude oil and most of its LPG — the primary cooking fuel for households and commercial establishments — passes through the strategic waterway.

“India is buying oil from Iran following a U.S. waiver allowing purchases of Iranian crude,” said Amitendu Palit, senior research fellow and research lead at the Institute of South Asian Studies. He added that future imports would depend on whether sanctions on Iranian oil are reinstated and how the regional geopolitical situation evolves.

Despite India’s long‑standing ties with Tehran, there is a growing public perception that New Delhi has tilted towards Washington since the start of the Middle East conflict.

Last week, U.S. President Donald Trump urged countries dependent on energy flows through the Strait of Hormuz to join a U.S.-led naval coalition to protect shipping in the waterway, saying they must “grab it and cherish it” while pledging U.S. support.

“India has chosen to negotiate bilaterally with Iran for safe passage instead of joining Washington’s proposed naval coalition — a deliberate act of distance,” Bhattacharya said. It reflects India’s energy pragmatism and reluctance to be publicly enlisted in a conflict it did not choose.

The balancing act comes after the Trump administration last year imposed an additional 25% tariff on Indian exports and accused New Delhi of funding Russia’s war in Ukraine by importing cheap crude from Moscow.

To secure a trade deal with Washington, India cut back on Russian oil imports and increased purchases from the Middle East. However, the outbreak of war disrupted those supplies, forcing India to return to Russian crude amid tight global markets and rising fuel prices.

Kpler data shared with CNBC shows that India’s imports of Russian oil rose to around 1.9 million barrels per day as of March 24, up from about 1 million bpd in February. Despite this, India’s energy procurement costs have soared.

The average price of the Indian crude basket surged from $69 per barrel in February 2026 to $113 per barrel in March due to a “steep rise in procurement costs,” Pankaj Srivastava, senior vice president at Rystad Energy, told CNBC in an email.