How the Middle East crisis is reshaping India's energy bill

Since late 2023, Houthi rebel attacks on commercial shipping in the Red Sea have rerouted around 30% of global container traffic away from the Suez Canal. Combined with fresh US sanctions on Iranian crude and continued Israel-Iran tensions, India — which imports 87% of its oil — has been hit from multiple directions. The insurance premium on tankers through the Red Sea has spiked 300–500%, adding $3–5 per barrel to every cargo India receives. In FY 2025-26, India's crude import bill climbed to roughly $148 billion, a 9% jump over the prior year. The government has quietly doubled strategic petroleum reserve fill orders and accelerated talks with Russia, UAE, and Brazil to diversify supply. Meanwhile, domestic refiners like IOC, BPCL, and HPCL have absorbed much of the hit rather than pass it to consumers — a politically driven call that widens their under-recovery.