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Subject: Energy Security

  • In talks with Rubio, Jaishankar flags India concerns over Russia sanctions

    Why in the News

    India has conveyed its economic and strategic concerns over a new United States law that empowers Washington to impose penal tariffs on buyers of Russian energy. The External Affairs Minister raised the Sanctioning Russia and Iran Act (SRIA) with the United States Secretary of State at a bilateral meeting in New York, on the sidelines of the United Nations General Assembly session. This was the first official discussion between the two governments since the United States President signed the law. Russian Urals crude currently makes up 51 per cent of India’s total crude imports, so a measure aimed at buyers of Russian energy reaches India directly. The contested point is whether a partner’s energy sourcing can be made a sanctions target without unsettling the wider relationship that the same partner is being asked to deepen.

    What does the Sanctioning Russia and Iran Act do?

    1. A tariff mandate, not a discretion: The law mandates the United States President to penalise countries that buy Russian oil, with tariffs of up to 100 per cent. It directs action rather than leaving the choice open.
    2. Extension to Iran: The same law extends sanctions on trade with Iran.
    3. The implementation window: It can affect India if implemented after the stipulated one month period.
    4. How the penalty operates: The instrument is a tariff on goods from the purchasing country. The cost therefore lands on that country’s exports rather than on the oil trade itself.

    Why does the law bear on India?

    1. The share of Russian crude: Russian Urals makes up 51 per cent of India’s total crude imports, so no substitution is marginal.
    2. The stated Indian position: The Ministry of External Affairs has said the move would carry “implications” for the bilateral relationship and for the international energy market if India is pressured to cut its intake of Russian crude.
    3. Energy security as the ground: India’s stated ground for its sourcing is energy security for a population of 1.4 billion.
    4. Two exposures at once: India faces a supply question on the oil it buys and a market access question on the goods it sells, from the same instrument.

    What did the two sides say?

    1. India’s account: The External Affairs Minister said he had “reiterated India’s interests and concerns with regard to SRIA”, and that the situations in Ukraine and Iran were also discussed.
    2. The United States account: The Secretary of State’s public account referred to building the strategic partnership and to coordinating on key regional priorities and upcoming multilateral efforts.
    3. What the gap indicates: The law led the Indian readout and did not appear in the American one, so the two governments are not yet treating it as a shared agenda item.

    What is the diplomatic calendar around this exchange?

    1. Leader level meetings: The two are understood to be preparing for meetings between the United States President and the Prime Minister later this year.
    2. The likely venues: A meeting is possible at the ASEAN Summit in November, with a bilateral expected in mid December, when the United States hosts the G20 Summit in Miami.
    3. The Quad gap: This is the third year in succession that India has not hosted the Quad Summit. New Delhi has been seeking a date for the leaders of the United States, Australia and Japan to travel to India.

    Challenges to India’s Russian crude sourcing under sanctions pressure

    1. Secondary measures reach the service chain, not only the barrel: Shipping, insurance and payment channels can be designated even where the purchase of the oil is not itself prohibited. Eg. Tankers and shipping companies carrying Russian crude have been designated under earlier rounds of United States and European Union measures.
      The Fix: Expand rupee and third currency settlement and domestic protection and indemnity cover for crude cargoes, so the trade does not rest on sanctioned intermediaries.
    2. The discount is the whole commercial case: Russian crude is attractive because it sells at a discount to competing grades, and that discount narrows whenever the compliance risk of handling it rises. Eg. Indian refiners cut Russian purchases in earlier sanctions rounds once compliance costs offset the price gap.
      The Fix: Hold diversified term contracts with West Asian and African suppliers, so a disappearing discount becomes a pricing problem rather than a supply one.
    3. A tariff penalty lands on exporters with no role in the oil trade: A trade measure keyed to energy sourcing is paid by labour intensive exporters selling into the American market. Eg. Textiles, gems and jewellery, and marine products are among India’s most exposed export lines to the United States.
      The Fix: Pair any tariff exposure with a targeted export credit and market diversification package for the affected lines.
    4. Refinery configuration limits how fast sourcing can shift: A refinery is built for particular crude grades, so moving away from a medium sour blend is a technical and contractual decision rather than a purchasing one. Eg. Replacing Urals requires comparable medium sour barrels, largely from West Asia, at short notice.
      The Fix: Expand strategic petroleum reserve and commercial storage capacity, so a sourcing shift can be absorbed over months rather than weeks.

    Conclusion

    India’s objection is not to the sanctioning of Russia but to being made to pay for its own sourcing decisions through a trade penalty on unrelated exports. The law directs rather than permits, which leaves little room for the discretion a bilateral understanding would normally use, and that is why the exchange produced a stated concern instead of an assurance. What remains unresolved is whether a strategic partnership can carry a penalty aimed at one partner’s energy supply. The points to watch are whether the measure is actually applied when the statutory window closes, and whether the leader level meetings later this year are used to seek relief from it.

    Back2Basics: Urals Crude

    1. What it is: Urals is Russia’s principal export crude, a medium sour blend produced by mixing heavy sour oil from the Urals and Volga region with lighter Western Siberian grades.
    2. How it is priced: It trades at a differential to the Brent benchmark, and that differential is what makes it attractive or unattractive to a buyer.
    3. Why refiners want it: A medium sour grade suits complex refineries built to process heavier crude, which can convert it into higher value products at a lower input cost.
    4. Sanctions treatment: G7 countries and the European Union apply a price cap on seaborne Russian crude, under which Western shipping and insurance services are available only for cargoes sold below the capped price.

    Matching Previous Year Question

    “[2025, GS2, 15 marks] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?”

  • Serious escalation

    Why in the News

    The U.S. Russia Sanctions Act has been signed into law, giving the U.S. President authority to levy tariffs of up to 100% on countries such as India that import large quantities of Russian oil and gas. The escalation of reciprocal tariffs to 50% on India last year rested on an Executive Order and could have been rescinded by the same method. This Act has been passed by the U.S. Congress, so it carries a higher order of legal permanence, and the President must justify any waiver in writing to Congress. The tension is that the tariff India must now negotiate against is both larger and far harder to reverse, and it stacks on levies already in force at a moment when Russia supplies more than half of India’s crude and the alternative sources are constrained.

    What does the U.S. Russia Sanctions Act do, and why is it harder to reverse?

    1. The authority it creates: The Act authorises the U.S. President to impose tariffs of up to 100% on countries importing large quantities of Russian oil and gas.
    2. Statute rather than executive instrument: The measure was passed by Congress, which gives it a higher order of legal permanence and authority than the Executive Order that carried last year’s 50% reciprocal tariffs.
    3. The waiver is constrained: Any waiver the President wishes to grant must be justified in writing to Congress.
    4. The rate is a ceiling, not a floor: The phrasing authorises tariffs of up to 100%, which leaves room for a lower rate to be set without amending the Act.

    What does the tariff stack do to Indian exports?

    1. Three levies at once: The 100% tariffs would sit over and above the 10% forced labour tariffs and the 50% Section 232 tariffs on steel and aluminium.
    2. The market at risk: The United States is India’s largest export destination, accounting for about 20% of total goods exports.
    3. How the 50% was absorbed: Exporters mitigated the earlier 50% tariffs by sharing the cost with their American customers, which was a financially devastating and unsustainable way to retain them.
    4. Why that cannot be repeated: Sharing a 100% tariff will be impossible for India’s exporters, who are largely micro, small and medium enterprises.
    5. The net effect: Indian exports to the United States become too uncompetitive to sustain should the new tariffs take effect.

    What three options does India have?

    1. Cut Russian oil imports: India reduces its purchases of Russian crude to fall outside the Act’s trigger.
    2. Retain imports and absorb the tariff: India continues buying Russian oil and bears the tariff, which would be a significant blow to its export ambitions and to its micro, small and medium enterprises.
    3. Negotiate a low rate: India persuades the United States to set a low tariff using the up to 100% phrasing already in the law.

    Why is replacing Russian crude difficult?

    1. Dependence level: Russia accounted for more than 51% of India’s oil imports as of July 2026.
    2. The alternative route is constrained: Supplies through the Strait of Hormuz remain constrained, which limits the Gulf as a substitute at short notice.
    3. Port capacity is the bottleneck: India will have to press countries such as Oman to accelerate the expansion of alternative ports.
    4. Price conditions are adverse: Oil remains well above $100 a barrel, which makes favourable terms with new suppliers increasingly difficult to obtain.

    What is the negotiating window, and what does the record suggest?

    1. The time available: Thirty days remain before the United States can levy the tariffs.
    2. The diplomatic occasion: The Union Commerce Minister is scheduled to travel to the United States at the end of the month for the G20 Trade Ministerial.
    3. What the record shows: Historical data show India has usually complied with U.S. pressure to cut oil imports from particular countries, Russia included, irrespective of vocal claims of strategic autonomy.
    4. The test: India’s ability to secure a low rate rather than a waiver is the measure of what the bilateral relationship at the leadership level can deliver.

    Challenges to the U.S. Russia Sanctions Act

    1. Origin of crude is hard to trace: Sanctioned barrels move through blending, ship to ship transfer and re export, so a measure keyed to the origin of oil is difficult to administer. Eg. Russian crude refined in India and exported as diesel to Europe has been treated as an Indian origin product.
      The Fix: Key the measure to refinery level crude import records rather than to the origin declared on a finished product shipment.
    2. Waiver discretion is narrowed but not removed: The written justification requirement raises the political cost of a waiver without barring one, so relief remains available and remains uncertain. Eg. The Countering America’s Adversaries Through Sanctions Act, 2017 carried a national interest waiver that the U.S. administration left unexercised in India’s S 400 air defence procurement.
      The Fix: Seek a defined low rate under the up to 100% phrasing, since a rate is set by the President while a waiver must be defended to Congress.
    3. A tariff on the buyer raises the price for every buyer: Removing a large purchaser from discounted Russian barrels tightens the non sanctioned market and lifts the global benchmark. Eg. The G7 price cap of 2022 was built around a discount ceiling precisely to keep Russian barrels flowing rather than withdraw them from supply.
      The Fix: Press for a price cap style mechanism permitting purchase below a ceiling, in place of a tariff levied on the importing country.
    4. Legislated tariffs outlast the dispute that produced them: A measure in statute survives a change of administration and a settlement of the underlying conflict, so relief later requires a fresh Act of Congress. Eg. The Jackson Vanik amendment of 1974 continued to apply to Russia until its repeal in 2012, long after the emigration restrictions it targeted had ended.
      The Fix: Negotiate a sunset clause or a certification trigger tied to a settlement, so that relief does not depend on fresh legislation.

    Conclusion

    The instrument has changed character, and that is what makes this escalation different from the last one. A tariff resting on an Executive Order was reversible by the office that imposed it, and a tariff resting on an Act of Congress is not. India’s three options are all costly, and the cheapest of them, a negotiated low rate under the ceiling already written into the law, has to be secured inside the thirty day window and without the leverage that a reversible instrument once gave both sides. The G20 Trade Ministerial at the end of the month is the point at which that attempt is made.

    Back2Basics: Section 232 tariffs

    1. The statute: Section 232 of the U.S. Trade Expansion Act of 1962 is the national security trade provision of U.S. law.
    2. The process: It authorises the U.S. Commerce Department to investigate whether imports of a specified product threaten to impair national security.
    3. The power it triggers: On an affirmative finding, the President may adjust imports of that product through tariffs, quotas or other restrictions.
    4. How it applies: Section 232 measures attach to a product rather than to a country, so steel and aluminium tariffs imposed under it apply to imports from all origins.

    Matching Previous Year Question

    [2025, GS2, 15] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?”

  • Russia sanctions Bill: Tool for Trump, worry for India

    Why in the News

    The United States House of Representatives has passed the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, a Bill aimed at squeezing Russia’s revenue from oil and gas exports amid the war in Ukraine. The US Senate approved it last month, so the Bill now needs only the US President’s signature to become law. India is the second biggest export market for Russian crude, and Russia currently accounts for nearly half of India’s crude oil imports. The Bill authorises tariffs of up to 100 percent on the top five buyers of Russian energy, and it leaves both implementation and waiver to the President’s discretion. The tension is that a law written to cut Russia’s energy revenue arrives while West Asian supply is constrained, so its most immediate value to Washington is leverage in a trade negotiation India has not yet concluded.

    What is the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026?

    1. Object of the law: It targets the revenue Russia earns from oil and gas exports while the war in Ukraine continues.
    2. The tariff instrument: It authorises tariffs of up to 100 percent on the top five buyers of Russian oil and natural gas. This is a watered down version of an original proposal for a blanket 500 percent tariff on all buyers of Russian energy.
    3. Presidential discretion: The Bill hands the President discretionary power over whether to implement its provisions, and a separate power to waive their application.
    4. Enforcement sequence: If the Act is signed, the US Trade Representative identifies the targeted countries. It then recommends the tariff rates to be applied to them.

    Why is Russian crude difficult for India to replace?

    1. Import dependence: India depends on imports to meet over 88 percent of its crude oil needs.
    2. Scale of the Russian share: India imported 2.08 million barrels per day of Russian oil in August, 45 percent of its total oil imports, on vessel tracking data from Kpler. The share stood at 23.3 percent in January.
    3. How Russia became the main supplier: Much of the West shunned Russian crude after the February 2022 invasion of Ukraine, and Russia began offering discounts to willing buyers. A peripheral supplier thereby displaced traditional West Asian suppliers as India’s biggest source.
    4. No alternative of scale: The West Asia conflict has cut supply from India’s traditional sources, leaving Russia the only viable supplier of scale for an import dependent refining system.
    5. A reversal already tested: Penal tariffs imposed by the US last year over Russian oil imports were followed by a sizeable reduction in India’s purchases of Russian crude. The West Asia war then turned that trend on its head.

    Why would full enforcement hurt the United States itself?

    1. Supply is already stifled: The US President has called on Ukraine to halt strikes on Russian refineries, because oil and petroleum product prices have run away amid constrained global supplies.
    2. Refining margins: US diesel crack spreads, the gap between the price of crude and the price of the diesel refined from it, have reached $114 per barrel, largely because Russian diesel is absent from the market.
    3. Volume effect of enforcement: Tariffing the largest buyers would push millions of barrels of Russian oil out of a market that is already tight, sending oil and fuel prices higher.
    4. Electoral timing: US midterm polls fall later this year, and a fuel price spike before them is an outcome the administration would want to avoid.

    How does the Bill strengthen Washington’s hand in the trade negotiation?

    1. No trade agreement yet: India and the US signed a framework agreement in February and have not concluded a trade agreement since.
    2. The tariff power the President lost: The US Supreme Court ruled that the President lacked authority under the International Emergency Economic Powers Act, 1977 to impose broad import duties. That ruling closed the reciprocal tariff route in February, and the administration has been finding newer ways to impose trade restrictions since.
    3. Congressional approval changes the footing: A tariff grounded in a statute passed by Congress stands on firmer legal ground than one resting on executive emergency powers.
    4. Leverage over negotiators: A signed law gives the administration an additional lever to apply to Indian negotiators at a crucial stage of the bilateral trade talks.

    What room does the Bill leave for India?

    1. A compliance window: Countries identified as targets would normally have 180 days to reduce Russian energy imports or to negotiate with Washington.
    2. Waivers: The Bill empowers the President to waive the application of its provisions, and India is expected to press for one if the Bill comes into force.
    3. Engagement already under way: The Ministry of External Affairs has said the issue has been discussed at high levels in recent months with various US interlocutors. Its potential implications for the bilateral relationship and for the international energy market have been articulated by the Indian side.
    4. The stated policy line: The government has said it remains committed to the country’s energy security “through diversified sourcing and on the basis of evolving market dynamics”.
    5. A tested channel: India communicated its energy concerns to Washington last year as well, when the original draft of the Bill was first mooted.

    Challenges to the Russia sanctions Bill

    1. The ceiling is still punitive: A 100 percent duty remains too high for Indian exporters to absorb, whatever the reduction from the original proposal. Eg. Penal tariffs imposed last year over Russian oil purchases were enough to cut India’s imports of that crude.
      The Fix: Convert the threat into a written exemption tied to a verified reduction schedule, so exporters can price the risk.
    2. Discretion makes the threat unpredictable: The law’s force depends entirely on a choice to implement or to waive, so no targeted country can plan around it. Eg. Compliance today carries no assurance against designation in a later quarter.
      The Fix: Publish the criteria and the timeline governing waivers, so a targeted country knows what compliance actually buys.
    3. Sanctions displace trade rather than end it: Restrictions push flows to intermediaries, opaque shipping and discounted channels instead of reducing the exporter’s volumes. Eg. A shadow fleet of ageing tankers with opaque ownership has carried Russian crude since the Group of Seven price cap of December 2022.
      The Fix: Pair any tariff measure with vessel, insurance and ship management level enforcement, so the volume actually moved falls.
    4. Coercion pushes the target toward rival blocs: Tariffing an energy importer for its sourcing decisions strengthens the case within that country for settlement and supply arrangements outside Western networks. Eg. Rupee and third currency settlement channels for oil payments expanded after the post 2022 restrictions on Russian banking.
      The Fix: Offer the targeted buyer an alternative supply arrangement at comparable landed cost rather than a penalty alone.

    Conclusion

    The Bill converts a discretionary pressure tactic into a statutory one, and that conversion is the actual change. India’s exposure now runs through two channels at once, its crude sourcing and an unfinished trade negotiation, and a single signature links them. The thing to watch is not whether the law is signed but whether it is enforced, waived or simply held in reserve. The first marker is whether the US Trade Representative names India among the targeted buyers.

    Back2Basics: International Emergency Economic Powers Act, 1977

    1. What it is: A United States statute that lets the President regulate international commerce after declaring a national emergency over an unusual and extraordinary threat originating outside the country.
    2. What it is used for: Most US sanctions programmes, including asset freezes and bans on transactions with designated foreign persons and entities, are administered under its authority.
    3. Who operates it: The Office of Foreign Assets Control, in the US Treasury Department, designates targets and issues licences under it.

    Matching Previous Year Question

    “[2025, GS2, 15] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?”

  • US share in India’s LPG imports surged to over 50% from under 10%

    Why in the News

    The share of the United States in India’s liquefied petroleum gas (LPG) imports has crossed 50 per cent in the six months since the West Asia conflict began, against less than 10 per cent in the preceding six months. The war began with United States and Israeli strikes on Iran in late February, and it halted vessel movement through the Strait of Hormuz. India’s import basket had been dominated by Gulf suppliers, so the loss of that route forced a substitution rather than a fall in demand. The tension is that a supply system built on a short haul from four Gulf sellers has been replaced inside six months by a long haul from a single seller. The concentration has moved rather than dissolved.

    Why did a shipping chokepoint translate into an LPG shock?

    1. The route’s function: The Strait of Hormuz is a narrow waterway connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea, and it is the primary evacuation route for energy supplies from the wider Gulf region.
    2. Its global weight: The strait accounted for a fifth of world oil and liquefied natural gas (LNG) flows, so its closure was a global disruption before it was an Indian one.
    3. India’s exposure through it: About 90 per cent of India’s LPG imports came from West Asia through the strait, against about 40 per cent of crude oil imports and 60 per cent of LNG imports.
    4. Why LPG was hit hardest: Movement through the strait effectively covered around 54 per cent of India’s total LPG consumption, so one blocked route touched more than half the cooking fuel base.

    How did India’s LPG import basket change in six months?

    1. Overall volumes: India’s total LPG imports in the six months to August fell 43.1 per cent from the preceding six months, to 7.14 million tonnes.
    2. United States: Supplies surged 281.1 per cent to 3.78 million tonnes for a 53 per cent share, against about 993,000 tonnes and a 7.9 per cent share in September to February.
    3. United Arab Emirates: Volumes crashed 79.8 per cent to about 958,000 tonnes, and the share of the pre-war leading supplier fell to 13.4 per cent from 37.8 per cent.
    4. Qatar: Volumes plummeted 84.7 per cent to about 405,000 tonnes, and the share shrank to 5.7 per cent from 21.1 per cent.
    5. Kuwait: Volumes fell 81.7 per cent to about 346,300 tonnes, and the share contracted to 4.9 per cent from 15.1 per cent.
    6. Saudi Arabia: Volumes fell 76.1 per cent to about 423,700 tonnes, and the share dropped to 5.9 per cent from 14.1 per cent.

    Why did the United States become the fallback supplier?

    1. Pre-existing scale: Washington was the largest LPG exporter worldwide before the crisis, so it was the only seller with spare volumes at the scale India needed.
    2. Price position: United States propane was already cheaper than Asian supplies before the war, which made the switch commercially defensible and not only an emergency measure.
    3. Availability over distance: With no nearby alternative, India accepted a higher delivered cost to bring cargoes from further away, because keeping cooking gas available was the operative priority.
    4. The precedent it follows: The redirection mirrors the earlier flow of Russian crude barrels to India, where a disrupted market was replaced by whichever seller could load immediately.

    What does the episode reveal about India’s energy import dependence?

    1. The dependence baseline: India imports over 88 per cent of its oil, 60 per cent of its LPG and about 50 per cent of its natural gas, so a routing disruption anywhere becomes a domestic supply question.
    2. Concentration is the real exposure: Four Gulf sellers on one waterway meant a single closure removed most of the basket at once, and no diversification existed to absorb it.
    3. Substitution has a time cost: Rebuilding half the basket around one distant supplier took six months of scrambling, which is the lead time a chokepoint closure imposes on an importer.
    4. The dependence is unresolved: American flows are expected to stay strong until West Asian supply normalises, and no clarity exists on when that will happen.

    Challenges to India’s LPG supply security

    1. The long haul carries a freight and transit penalty: A United States cargo takes far longer to reach an Indian port than a Gulf cargo, and the added voyage cost sits on every tonne landed. Eg. American propane bound for Asia moves through the Panama Canal, where transit slots were rationed during the drought-driven draft restrictions of 2023 and 2024.
      The Fix: Contract a share of American volumes on delivered terms with an alternative Cape of Good Hope routing priced into the contract.
    2. Import and bottling infrastructure is concentrated on one coast: India’s very large gas carrier berths and bottling capacity sit largely on the western seaboard, built around short Gulf voyages and rapid turnarounds. Eg. The major LPG import terminals cluster at west coast ports such as Kandla, Mundra and Sikka.
      The Fix: Expand east coast import capacity and extend LPG pipeline evacuation on the model of the Paradip-Haldia-Durgapur line.
    3. Administered retail prices push the shock onto the exchequer: Domestic cylinder prices are held stable, so a higher landed cost is absorbed by oil marketing companies or by the Budget rather than by the consumer. Eg. The targeted subsidy paid per cylinder under the Pradhan Mantri Ujjwala Yojana sits on top of a capped base price.
      The Fix: Move the subsidy fully to a direct transfer indexed to the import price, so the fiscal cost is visible and bounded rather than carried on company balance sheets.
    4. India holds no strategic reserve for cooking gas: Emergency stocks exist for crude oil alone, so an LPG disruption has to be managed through spot buying at the worst available price. Eg. The Indian Strategic Petroleum Reserves caverns at Visakhapatnam, Mangaluru and Padur store crude oil and not LPG.
      The Fix: Build dedicated pressurised or refrigerated LPG storage at the major import terminals with a mandated minimum cover in days of consumption.
    5. Substitution away from cylinders is only partial: Piped natural gas and electric cooking reach a limited share of households, so LPG demand cannot be shifted quickly when imports tighten. Eg. City gas distribution networks operate only in geographical areas awarded through bidding rounds by the Petroleum and Natural Gas Regulatory Board.
      The Fix: Accelerate piped connections inside already awarded city gas areas and tie household conversion targets to the licence conditions.

    Conclusion

    India has replaced a blocked route rather than reduced a dependence. The basket is now anchored on one distant seller in place of four near ones, and the switch was completed at speed because no stock cushion existed to buy time. The status is that American cargoes are expected to hold their share until West Asian supply normalises. The marker to watch is whether the Gulf share recovers once traffic through the Strait of Hormuz resumes, or whether contracts written during the disruption lock in a permanently longer supply line.

    Matching Previous Year Question

    “[2025, GS2, 15 marks] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?”

  • Russian oil imports fell 26% in Aug amid supply pressure, China factor

    Russian oil imports fell 26% in Aug amid supply pressure, China factor

    Why in the News

    India’s oil imports from Russia fell 26 per cent in August from the historic highs of July, driven by tighter Russian export availability and stronger competition from Chinese refiners, according to provisional tanker data. Those July highs were themselves a product of the shift in India’s import strategy since March 2026, when Strait of Hormuz disruptions tightened West Asian oil flows. The fall in Russian volumes was the primary reason for the over 8 per cent decline in India’s overall oil imports in the month, even as imports from Venezuela reached their highest monthly level since 2020. The open question is whether August is a temporary retreat or the start of a period in which Russian barrels become scarcer, costlier and harder for Indian refiners to secure.

    How sharp was the fall, and does the data show a structural retreat?

    1. The Russian volume: India imported 2.08 million barrels per day (bpd) of Russian oil in August, down 26.3 per cent from July’s record 2.82 million bpd, on vessel tracking data from the commodity market analytics firm Kpler.
    2. The total intake: India’s total oil imports stood at 4.62 million bpd in August, down 8.4 per cent from July’s 5.04 million bpd.
    3. Russia’s share: Moscow’s share of India’s crude imports declined to 45 per cent in August from 55.9 per cent in July.
    4. Domestic contribution: Maintenance shutdowns at a few Indian refineries also contributed to the lower crude intake.
    5. Kpler’s reading: The shift points to market normalisation rather than a structural retreat from Russian crude. Flows are expected to stabilise at 2.0 to 2.5 million bpd, so Russian oil remains the mainstay of India’s imports.

    Why are Russian barrels getting harder to move to India?

    1. Attacks on export infrastructure: Ukrainian attacks on Russia’s oil and gas infrastructure are a key reason for the pressure on Russian exports. Attacks on export infrastructure in the Black Sea have become a tangible threat to the navigation of energy tankers in the region.
    2. The Black Sea freight penalty: Moving a Suezmax tanker (a crude carrier sized to transit the Suez Canal fully loaded) from the Black Sea port of Novorossiysk to India’s west coast now costs about $20 million, or roughly $20 per barrel, compared with about $13 per barrel from the Baltic Sea ports.
    3. The Baltic seizure risk: Dispatches from the Baltic ports carry their own risk, since Russian tankers sailing around Europe face detention or seizure by European countries.
    4. The Arctic route favours China: Russian exporters are sending more vessels through the Northern Sea Route, for which August and September are the peak traffic months even in a normal year because ice is thinnest. Black Sea drone threats add to that pressure, and the Arctic routing makes China the most cost-competitive destination.

    Why is China competing harder for the same cargoes?

    1. Russia is exporting less: Moscow is trying to maximise domestic refinery production to meet domestic fuel demand amid the Ukrainian attacks on its energy infrastructure, which lowers the crude available for export to India and to everyone else.
    2. Iranian barrels have thinned: Iranian oil volumes available to Chinese refiners have fallen amid the Strait of Hormuz crisis, pushing Chinese buyers towards Russian cargoes.
    3. The question for the coming months: With Russia exporting less to India and overall, and China competing more aggressively for available cargoes, the issue is whether Russian barrels become scarcer, costlier and harder for Indian refiners to secure.

    How has the Hormuz crisis reshaped India’s import slate?

    1. The break in March 2026: India’s crude import strategy shifted sharply since March 2026 as Strait of Hormuz disruptions tightened West Asian oil flows and increased freight risks.
    2. The scale of the Gulf loss: About 40 per cent of India’s crude imports usually came through the Strait of Hormuz, and a large part of that supply has effectively been offline.
    3. Diversification beyond Russia: Russian crude remains the backbone of the import slate, and refiners have diversified aggressively towards African, North American and South American barrels to offset the drop from the Gulf.
    4. Venezuela’s return: Imports from Venezuela jumped 60.2 per cent over July to 350,000 bpd in August. India restarted Venezuelan imports a few months ago after nearly a year of zero imports, once the US allowed Caracas’s oil to flow into the global market.
    5. How Venezuelan oil was unlocked: After the US captured Venezuela’s then President in early January, the US President said Washington would take control of Caracas’s oil sector. A few commodity traders were then authorised by Washington to sell Venezuelan oil, previously under US sanctions, globally.

    Conclusion

    Russian crude still anchors India’s imports, and the August fall reads as normalisation rather than exit. The pressure is now on the supply side, in Russia’s own export capacity and in China’s bidding for the same barrels. The figure to watch is whether India’s Russian intake holds its recent range in September, when Arctic routing to China is at its seasonal peak.

    Back2Basics: Northern Sea Route

    1. What it is: An Arctic shipping lane along Russia’s Siberian coast, running from the Kara Sea in the west to the Bering Strait in the east, linking Europe with East Asia.
    2. Why it is seasonal: Sea ice makes it navigable mainly in late summer and early autumn, and outside that window ships need icebreaker escort.
    3. Why it matters: It cuts the Europe to East Asia distance substantially compared with the Suez Canal route, and Russia regulates transit through its own Northern Sea Route administration.

    [2025, GS2, 15 marks] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?”

  • Can India build a strategic fuel system?

    Why in the News

    Disruptions related to West Asia have exposed a vulnerability in India’s energy security system. India imports large quantities of crude oil, liquefied natural gas (LNG) and liquefied petroleum gas (LPG), but its ability to store, move and release these fuels during a prolonged disruption differs sharply by fuel. Against this, the government is considering a decade long strategic fuel programme that would add about 28 MT (million tonnes) of crude oil storage, 9 MT of LNG storage and 4 MT of LPG storage. The programme remains under consideration and should be treated as a proposed target rather than committed capacity.

    What is India’s proposed strategic fuel storage programme?

    1. Scale of the proposal: The decade long programme would add about 28 MT of crude oil storage, 9 MT of LNG storage and 4 MT of LPG storage, roughly 41 MT of combined new capacity.
    2. Purpose: The reserves are intended to provide nearly two months of crude oil and LNG demand cover and about six weeks of LPG demand cover during a prolonged supply disruption.
    3. Status: The programme remains under consideration and is a proposed target, not committed capacity.

    How much strategic fuel storage does India already have?

    1. Crude storage is the most developed: Phase I of the Strategic Petroleum Reserve provides 5.33 MT of underground capacity, with actual storage of about 3.37 MT, or roughly 63 to 64 percent utilisation, across Visakhapatnam, Mangaluru and Padur. A further 6.5 MT has been approved under Phase II at Chandikhol and Padur.
    2. Execution has lagged on Chandikhol: Work on the Chandikhol project remains slow amid ongoing land acquisition requirements and the finalisation of commercial public private partnership frameworks.
    3. LPG storage is a fraction of the proposed target: The Visakhapatnam and Mangaluru caverns together provide about 0.14 MT of capacity, so a proposed 4 MT reserve would represent roughly a thirty fold increase in underground LPG capacity.
    4. Natural gas has no underground storage at all: India currently has no operational underground gas storage facility, and its gas security instead depends on domestic production, LNG imports, import terminals, commercial inventories and pipelines.
    5. Capacity is not the same as usable inventory: A facility has a physical capacity, but the fuel it actually holds can vary, and not all inventory is immediately accessible. During a crisis, the critical measure is how much fuel is available and at what withdrawal rate it can reach consumers.

    What does the proposed 9 MT of LNG storage actually mean?

    1. Regasification capacity is not the same as strategic inventory: India already has substantial LNG import and regasification infrastructure, but a regasification terminal’s capacity to convert LNG into natural gas does not itself constitute strategic inventory.
    2. LNG storage and underground gas storage work differently: LNG is stored as a cryogenic liquid at around 162 degrees Celsius below zero, requiring specialised insulated tanks and management of boil off gas. Underground gas storage instead regasifies the LNG first and injects the resulting natural gas into a depleted reservoir or cavern.
    3. A narrower stress test already exists: A study by the Petroleum and Natural Gas Regulatory Board (PNGRB) and the International Copper and Fertiliser (ICF) group examined how much additional LNG infrastructure would be needed to supply priority consumers for a stress period of 20 days by 2030, estimating a requirement of about 0.56 to 0.6 MT of LNG equivalent, achievable with roughly eight additional LNG tanks at a combined cost of about 1 billion dollars.
    4. The proposed reserve is an order of magnitude larger: Against the same study’s projection of roughly 58 MT of annual LNG imports, the proposed 9 MT works out to about 56 days of import cover, which is the basis for describing it as nearly two months of LNG import cover, not two months of India’s total gas consumption.

    Does all of India’s gas storage have to take the form of LNG tanks?

    1. A portfolio approach is possible: India could eventually use a combination of surface LNG tanks and underground natural gas storage rather than LNG tanks alone.
    2. A parallel proposal targets import terminals directly: A separate proposal from the Ministry of Petroleum and Natural Gas would require LNG import terminals to maintain storage capacity 10 percent above their normal operating requirement, with the additional capacity available to the government during supply or price disruptions.
    3. Depleted reservoirs offer the largest potential volumes: Depleted oil and gas reservoirs, which account for 74 percent of global working gas volume, could provide much larger volumes of underground gas storage, while salt caverns allow faster injection and withdrawal, making them more suited to shorter duration balancing.
    4. India has candidate geology but not yet usable storage: India’s sedimentary basins, including Krishna, Godavari, Cambay, Mumbai Offshore and Rajasthan, offer potential locations, but moving from geological potential to usable storage requires subsurface investigation, site selection, engineering, construction, testing, filling and pipeline integration. Rajasthan’s salt bearing formations have similarly been investigated for solution mined caverns, with suitability depending on depth, thickness, purity, geometry, groundwater and mechanical properties.

    What does the United States Strategic Petroleum Reserve show about storage as a system?

    1. Scale achieved through salt caverns: The United States Strategic Petroleum Reserve holds an authorised capacity of 714 million barrels across 60 salt caverns.
    2. Storage works only as part of an infrastructure system: The American reserve functions as an integrated network of caverns, pipelines, marine terminals and refineries, showing that strategic storage is fundamentally an infrastructure system and not simply an underground space.

    How mature are India’s crude and LPG storage systems?

    1. Crude is the most mature component: India already operates underground crude caverns and has developed the associated engineering capabilities.
    2. LPG presents a much larger scaling challenge: LPG storage is technically proven in India, but a proposed 4 MT reserve would require a substantial network of new caverns or other storage facilities, together with import terminals, pipelines, pumping systems and bottling infrastructure.
    3. The Mangaluru cavern illustrates the complexity involved: Underground construction requires geological and hydrogeological investigation, rock mechanics analysis and groundwater management, particularly where work takes place alongside operating surface facilities.

    How is India strengthening the logistics that move fuel once it is stored?

    1. India is investing to reduce reliance on foreign shipping: State run oil refiners and the Shipping Corporation of India plan to invest 1.5 to 2 billion dollars in a joint venture to acquire 59 ships.
    2. Sourcing is being diversified too: Indian Oil is expanding sourcing through new 2027 agreements with Algeria and increased purchases from the United States, while exploring direct stakes in Very Large Gas Carriers to secure greater control over its supply chain.
    3. New pipelines are expanding delivery, not storage: The PNGRB has authorised approximately 1,800 km of new LPG pipelines across six States, involving investment of around 0.7 billion dollars. These pipelines improve connections between supply sources and inland markets and reduce dependence on road movement, but they do not themselves add strategic storage.
    4. Every storage form depends on connectivity to be useful: Underground gas storage is useful only if it can inject into and withdraw from the gas grid at the required rate. LNG tanks are useful only when regasification and downstream pipelines can move the gas onward, and LPG caverns require connections to bottling and distribution systems.

    Who pays for building and running the strategic reserves?

    1. The reported cost remains unconfirmed: A reported 42 billion dollar programme, which the government has yet to confirm, combines infrastructure capital expenditure with the cost of purchasing and maintaining strategic fuel inventories, with more than half expected to go towards storage infrastructure and the balance towards purchasing and filling the reserves.
    2. A cess has been ruled out: Financing is a genuine challenge, and the government has rejected reports that a cess would be charged to pay for the reserves.
    3. Replenishment carries its own cost and risk: Stocks released during a crisis would need to be replenished, potentially when commodity and freight prices are higher, so the policy needs to settle who owns and finances the inventory, minimum stock obligations, emergency release authority, and who bears replenishment and price risk.
    4. A mixed commercial and strategic model could ease the burden: A model that combines commercial and strategic use of the same capacity could reduce the public financing burden, provided the commercially used capacity remains available during emergencies.

    Is storage capacity alone enough for India’s energy security?

    1. Building capacity is only part of the equation: A strategic reserve is effective only if India can access the fuel, transport it inland, and replenish stocks after a release.
    2. Energy security depends on an integrated framework: Reserves buy time, shipping brings the next cargo, pipelines deliver fuel inland, and governance decides how emergency releases are executed, so the real test of the programme is its ability to coordinate all these elements at once when a crisis hits.

    Conclusion

    India’s existing storage differs sharply by fuel, with crude the most developed, LPG a limited underground footprint, and natural gas without any operational underground facility. The proposed 28 MT of crude, 9 MT of LNG and 4 MT of LPG storage would mark a major expansion, but the programme remains under consideration, and its value will depend as much on shipping, pipelines and financing arrangements as on the storage capacity itself.

    Back2Basics: Petroleum and Natural Gas Regulatory Board (PNGRB)

    1. Governing law: PNGRB was set up under the Petroleum and Natural Gas Regulatory Board Act, 2006.
    2. Jurisdiction: It regulates the downstream petroleum and natural gas sector, including refining, processing, storage, transport, distribution, marketing and sale of petroleum products and natural gas, excluding production and exploration.
    3. Mandate: It authorises and lays down technical and safety standards for gas and LPG pipelines and city gas distribution networks, and protects consumer interests while promoting competitive markets.
    4. Relevance here: It is the regulator behind the LPG pipeline authorisations and the LNG stress test study referenced in this item.

    [2025] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?”

  • Iran war pushes India’s oil & gas import bill up 43%

    Why in the News

    India’s net oil and gas imports rose 43.4 percent in value in April to July of the current financial year, to $57.8 billion from $40.3 billion a year earlier. Import volumes barely moved, so the increase is almost entirely a price effect created by supply tightness and stifled energy flows through the Strait of Hormuz. With 88.3 percent of crude requirement met by imports, India has prioritised supply security over price, and the cost of that choice lands on the trade balance.

    What are net oil and gas imports?

    1. How the figure is built: Net oil and gas imports are arrived at by deducting petroleum product exports from oil, natural gas and petroleum product imports.
    2. Why the deduction matters: India is a net exporter of petroleum products because of its refining capacity, so gross import figures overstate the true external drain.
    3. What it still includes: India also imports some petroleum products, notably liquefied petroleum gas, so the netting does not remove product imports entirely.
    4. Why it is the tracked number: It measures the actual foreign exchange outgo on energy, which is what feeds into the trade balance and the current account.

    What is the Petroleum Planning and Analysis Cell?

    1. What it is: The Petroleum Planning and Analysis Cell (PPAC) is the data and analysis body under the Ministry of Petroleum and Natural Gas. It compiles India’s official import, consumption, production and pricing statistics for petroleum and natural gas.

    What is liquefied natural gas?

    1. What it is: Liquefied natural gas (LNG) is natural gas, primarily methane, cooled to minus 162 degrees C so that it becomes liquid and can be shipped in cryogenic carriers. It must be regasified at a terminal in the importing country before use.
    2. How it is priced: Spot LNG in Asia is priced against the Japan Korea Marker, with Henry Hub and the Title Transfer Facility serving the American and European markets.

    What is liquefied petroleum gas?

    1. What it is: Liquefied petroleum gas (LPG) is propane and butane, produced as a byproduct of oil refining or natural gas processing, and used for domestic cooking, industrial heating and autogas.
    2. How it is priced: It is priced against the Saudi Aramco Contract Price, which is loosely linked to Brent crude.

    Why did the import bill rise 43 percent when volumes barely moved?

    1. Volumes were nearly flat: Oil and LNG imports were only marginally higher in volume terms across April to July.
    2. Crude price did the work: The average landed price of imported crude was about $106 per barrel in April to July, sharply higher than about $68 per barrel in the corresponding period of last year.
    3. Value rose without volume: The crude oil import bill surged by over 56 percent year on year to $63.4 billion even as volumes rose only slightly, to 81.9 million tonnes or about 600 million barrels, from 81.5 million tonnes.
    4. The stated priority: India has been prioritising supply security over price considerations, so it imported at extremely high rates rather than curtail volumes.
    5. Product trade moved the same way: Petroleum product export volumes fell while export value rose, and product import volumes fell faster than product import value, both reflecting high international prices.

    How did each component of the energy trade basket move?

    1. Crude oil imports, volume: 81.9 million tonnes against 81.5 million tonnes a year earlier, a rise of 0.5 percent.
    2. Crude oil imports, value: $63.4 billion against $40.5 billion, a rise of 56.5 percent.
    3. Petroleum product imports, volume: 9.0 million tonnes against 16.4 million tonnes, a fall of 45.1 percent.
    4. Petroleum product imports, value: $5.6 billion against $7.6 billion, a fall of 26.3 percent.
    5. LNG imports, volume: 11,867 million standard cubic metres against 11,269 million standard cubic metres, a rise of 5.3 percent.
    6. LNG imports, value: $5.6 billion against $4.5 billion, a rise of 24.4 percent.
    7. Petroleum product exports, volume: 16.5 million tonnes against 20.1 million tonnes, a fall of 17.9 percent.
    8. Petroleum product exports, value: $16.7 billion against $12.4 billion, a rise of 34.7 percent.
    9. Net oil and gas imports: $57.8 billion against $40.3 billion, a rise of 43.4 percent.

    How exposed is India’s energy basket to the Strait of Hormuz?

    1. Crude dependence: India depends on imports to meet over 88 percent of its crude oil requirement, and its dependence on imported oil for the four months ended July was 88.3 percent, almost flat year on year.
    2. Gas dependence: About half of India’s natural gas consumption is met by imports, brought in as LNG.
    3. Share routed through the strait: Around 40 percent of India’s crude oil imports, 60 percent of its LNG imports and 90 percent of its LPG imports came from West Asia through the strait.
    4. Where the disruption showed: Petroleum product imports declined 45.1 percent in volume to 9.0 million tonnes because supply of major products India imports, such as LPG, was hit by the West Asia conflict.
    5. Why exports fell: India’s petroleum product export volumes fell almost 18 percent year on year to 16.5 million tonnes as domestic fuel supplies were prioritised amid the global supply crunch.

    Why does an oil price shock transmit into the wider economy?

    1. The volume multiplier: India annually imports 1.8 to 2 billion barrels of oil, so every $1 per barrel increase raises the oil import bill by up to $2 billion on an annualised basis.
    2. Share of total imports: Energy imports are a major component of India’s overall imports, so any meaningful increase moves the aggregate import number.
    3. Trade balance and current account: A higher energy bill widens the merchandise trade deficit and feeds directly into the current account deficit.
    4. Inflation channel: Higher landed crude costs pass into transport and freight costs and into the prices of petroleum linked goods.
    5. Exchange rate channel: A larger dollar outgo on energy adds to demand for foreign exchange and weighs on the rupee’s exchange rate.

    Challenges to managing India’s oil and gas import bill

    1. Demand is price inelastic in the short run: Refiners cannot cut crude intake without cutting fuel supply, so a price shock passes straight into the bill. Eg. Crude import volumes rose 0.5 percent even as the crude bill rose 56.5 percent in April to July.
    2. Concentration of LPG sourcing: A single region supplies almost the entire LPG import basket, leaving no substitute route in a disruption. Eg. The West Asian share of India’s LPG imports moves entirely through the Strait of Hormuz, with no second corridor available if the strait closes.
    3. Fixed rupee excise blocks pass through of relief: Central excise duty is levied as a fixed amount per litre rather than as a percentage, so falling crude prices accrue to revenue rather than to consumers. Eg. When Brent fell from $80 to $60 per barrel in early 2025, Delhi petrol fell by only about Rs 2 to 3 per litre.
    4. Strategic reserve cover below international norms: The buffer available to ride out a supply interruption is short of the accepted benchmark. Eg. India’s total crude cover of 74 days sits below the International Energy Agency norm of 90 days of net import cover.
    5. No strategic reserve for gas at all: The gas basket has an operational buffer but no strategic cushion. Eg. India’s LNG storage tanks at regasification terminals give roughly 10 days of operational buffer, with no strategic LNG reserve in existence.
    6. Spot LNG volatility deters utilisation: When spot prices spike, importers switch to coal or fuel oil, stranding regasification capacity. Eg. India’s roughly 42.5 million tonnes per annum of LNG regasification capacity runs at 60 to 65 percent utilisation because switching becomes rational above $15 per MMBtu.
    7. Refinery configuration ties India to sour crude sources: Indian refineries have invested in desulphurisation capacity built around Middle Eastern grades, which limits how fast the basket can be re-sourced. Eg. Most Middle Eastern crude India buys is priced against Dubai and Oman, and Saudi, Iraqi and UAE grades track that benchmark.

    Conclusion

    India’s net oil and gas import bill rose to $57.8 billion in April to July from $40.3 billion a year earlier, a 43.4 percent increase driven almost wholly by price rather than volume. At 88.3 percent crude import dependence and with the West Asian shares of crude, LNG and LPG all routed through the Strait of Hormuz, a chokepoint disruption converts directly into a macroeconomic shock. The figures are provisional data from the Petroleum Planning and Analysis Cell, and the next reading will show whether the price effect persists once Hormuz flows normalise.

    About India’s Crude Oil Procurement and Pricing

    1. Who buys: State owned refiners account for 73 percent of India’s procurement through Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited, with private refiners Reliance Industries and Nayara Energy accounting for 27 percent.
    2. How buying works: Each refiner independently forecasts demand two to three months ahead and negotiates bilaterally with suppliers such as Rosneft, Saudi Aramco and Iraq’s State Organisation for Marketing of Oil.
    3. How it is priced: All contracts are priced as Brent plus or minus a negotiated discount, and Middle Eastern grades track the Dubai and Oman benchmark.
    4. Where crude lands: Crude is received by tanker at Paradip, Mumbai, Kochi and Vadinar.
    5. Quality determines price: Sulphur content and American Petroleum Institute (API) gravity, the measure of a crude’s density, together determine refining cost and product yield, with sweet crude defined as sulphur content below 0.5 percent and sour crude requiring additional processing.

    Regulatory Framework Governing India’s Petroleum and Natural Gas Sector

    1. Ministry of Petroleum and Natural Gas: The apex policy body, which sets the framework for exploration, refining, marketing, pricing and strategic reserves, awards production sharing contracts, and exercises ownership over the public sector oil companies.
    2. Petroleum and Natural Gas Regulatory Board: Regulates refining, processing, storage, transportation, distribution, marketing and sale of petroleum products and natural gas, authorises City Gas Distribution networks, and determines pipeline tariffs on a common carrier basis.
    3. Directorate General of Hydrocarbons: The technical regulator for upstream exploration and production, which manages block allocations, monitors production sharing contracts, verifies reserves, approves field development plans and maintains the National Data Repository.
    4. Oil Industry Development Board: Funded by a statutory cess on domestic crude production, it finances oil industry development and wholly owns Indian Strategic Petroleum Reserves Limited, which operates the underground reserve caverns.
    5. Deregulated retail pricing: Petrol was deregulated in 2010 and diesel in 2014, so the Ministry does not directly set retail pump prices.

    Government Initiatives in the Petroleum and Gas Sector

    1. Strategic Petroleum Reserve: Phase I comprises 5.33 million tonnes of crude across three underground rock caverns at Visakhapatnam, Mangaluru and Padur, with a Phase II commercial cum strategic expansion under public private partnership models.
    2. Hydrocarbon Exploration and Licensing Policy, 2016: Replaced the earlier New Exploration Licensing Policy with a uniform licence covering all hydrocarbons, open acreage licensing and revenue sharing in place of production sharing.
    3. Administered Price Mechanism for domestic gas: The Ministry sets the administered price for domestic natural gas indexed monthly at 10 percent of the Indian Crude Basket price, following the Kirit Parikh Committee recommendations, subject to a floor and ceiling for legacy fields.
    4. Direct Benefit Transfer for LPG: LPG is subsidised through direct transfer, with Rs 300 per cylinder for Ujjwala beneficiaries.
    5. City Gas Distribution expansion: India’s city gas distribution network now covers 98 cities, supplying compressed natural gas for vehicles and piped natural gas for households from a mix of domestic gas and regasified LNG.

    Key Facts about Global Oil Benchmarks and India’s Reserves

    1. Brent crude: North Sea origin, 38 API and 0.37 percent sulphur, traded on the Intercontinental Exchange in London, accounting for 75 to 80 percent of global oil trade and serving as the reference against which all other grades are a premium or discount.
    2. West Texas Intermediate: Cushing, Oklahoma origin, 39.6 API and 0.24 percent sulphur, traded on the New York Mercantile Exchange, accounting for 15 to 20 percent of global trade and typically Brent minus $0 to $5 per barrel.
    3. Dubai and Oman: Persian Gulf origin, 31 to 33 API and 1.0 to 2.0 percent sulphur, traded on the Dubai Mercantile Exchange, accounting for 5 to 10 percent of global trade and typically Brent minus $5 to $15 per barrel.
    4. Why OPEC does not set the price: OPEC controls 40 percent of production but Brent sets 75 to 80 percent of global prices, since markets price oil hundreds of thousands of times a day while OPEC announces targets once and has no enforcement mechanism against quota cheating.
    5. Reserve position: India’s total crude cover is 74 days, made up of 9.5 days from the Strategic Petroleum Reserve and 64.5 days of oil marketing company commercial stocks, against the International Energy Agency norm of 90 days.
    6. LPG and LNG cover: LPG cavern capacity of about 140,000 tonnes gives roughly 22 days of cover against consumption of about 3 million tonnes a month, while LNG has about 10 days of operational buffer and no strategic reserve.
    7. Volatility of spot gas: The Japan Korea Marker swung from $3 per MMBtu in mid 2020 to $70 per MMBtu in August 2022.
    8. Committee recommendation on storage: The Parliamentary Standing Committee on Petroleum in December 2023 recommended equipping refineries with two to three days of smaller strategic storage at five to six additional locations, which could add 15 to 20 days of capacity.

    Back2Basics: Strait of Hormuz

    1. Location: A narrow sea passage connecting the Persian Gulf to the Gulf of Oman and onward to the Arabian Sea.
    2. Control: Iran controls the northern shore and seven of the eight islands in the strait, Oman controls the southern entrance, and the United States Fifth Fleet acts as the external guarantor of transit.
    3. Oil traffic: About 20 million barrels a day pass through it, amounting to 20 percent of global oil movement.
    4. Gas traffic: It carries 20 percent of global LNG trade, which makes closure hit gas hardest given Qatar’s dominance in LNG supply.
    5. Strategic character: It carries the highest concentration of energy flow of any maritime chokepoint in the world.

    Challenges in India’s Energy Security

    1. Stagnant domestic crude production: Falling domestic output pushes import dependence upward regardless of demand. Eg. Cess collections of the Oil Industry Development Board have declined in real terms because domestic crude production has stagnated.
    2. Regulatory conflict of interest: The same ministry sets the pricing environment and owns the companies whose losses that environment creates. Eg. The Ministry of Petroleum and Natural Gas simultaneously regulates the sector and holds ownership rights over Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited.
    3. Gaps in the regulatory perimeter: No single regulator covers the full chain from wellhead to pump. Eg. The Petroleum and Natural Gas Regulatory Board has no jurisdiction over upstream exploration, wellhead gas pricing or LPG retail pricing.
    4. Upstream reservoir disputes slow output: Technical disputes between operators delay field development and carry royalty implications. Eg. The gas migration dispute between ONGC and Reliance Industries in the Krishna Godavari basin required adjudication by the Directorate General of Hydrocarbons.
    5. Chokepoint concentration across all three fuels: Crude, LPG and LNG share the same maritime chokepoint, so diversification of supplier does not diversify route. Eg. LPG moves with crude tankers or on dedicated carriers through the same Strait of Hormuz.
    6. Tax structure blunts price signals: Taxes form roughly 60 percent of the retail pump price, weakening the link between global prices and consumer behaviour. Eg. Delhi petrol at Rs 96 to 97 per litre carried Rs 13 of central excise and Rs 15 to 18 of State value added tax before the crisis.
    7. Storage build out lags the exposure: Reserve expansion depends on capital and cavern geology, both of which take years. Eg. Phase II of the Strategic Petroleum Reserve is being pursued through public private partnership because budgetary funding alone has not delivered the capacity.

    Way Forward

    1. Complete Phase II of the Strategic Petroleum Reserve: Bring the commercial cum strategic caverns on stream to move total cover towards the 90 day International Energy Agency norm.
    2. Adopt the refinery level storage recommendation: Implement the Parliamentary Standing Committee’s December 2023 proposal on refinery level storage, which remains a recommendation rather than sanctioned capacity.
    3. Create a strategic gas reserve: Extend the reserve architecture to LNG, which today has only an operational buffer at regasification terminals.
    4. Shift excise from a fixed levy to an ad valorem levy: This would let consumers receive part of the benefit when crude prices fall, restoring the price signal.
    5. Diversify sourcing away from a single chokepoint: Expand term contracts with Atlantic basin, West African and North American suppliers so that a Hormuz disruption does not strike crude, LNG and LPG supply simultaneously.
    6. Raise domestic production through open acreage: Accelerate block awards under the Hydrocarbon Exploration and Licensing Policy to arrest the decline in domestic output.
    7. Separate ownership from regulation: Move ownership of the public sector oil companies out of the administering ministry so that pricing policy is not set by their shareholder.

    “[2025, GS2, 15] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?”

  • [19th August 2026] The Hindu OpED: Beyond America: Gulf states must build a regional order past the US security umbrella

    Question (2022, GS2): “How will I2U2 (India, Israel, UAE and USA) grouping transform India’s position in global politics?” 
    Linkage: This question explores how India integrates into new regional frameworks that include Gulf states (UAE) and Israel, illustrating the evolving security and economic partnerships in West Asia.

    Mentor Comment

    The United States President has threatened, for the second time, to bomb Oman, a long standing American ally that hosted talks between Washington and Tehran before the war was launched on 28 February. The threat against an ally exposes a conflict between an American security architecture built on bases across the Persian Gulf and a war in which those bases have become the principal liability of the states that host them.

    What is the American security umbrella in the Persian Gulf?

    1. What it is: The American security umbrella is the arrangement under which the United States guarantees the external security of the Persian Gulf monarchies through forward deployed forces, basing agreements and arms sales, in exchange for regional access and stable energy flows.
    2. Physical form: Over the years the United States built military bases across the Persian Gulf, hosting naval, air and command elements on the territory of partner states.
    3. Strategic premise: The arrangement rested on the assumption that an American presence deters Iran and that hosting American forces raises rather than lowers a host state’s security.
    4. Companion policy: It was paired with a decades old policy of containing Iran through sanctions, isolation and force posture.
    5. What the war has done to it: The foundations of this security architecture have been shaken, since American bases have turned out to be a liability in the hour of need.

    What is the Strait of Hormuz?

    1. What it is: The Strait of Hormuz is the narrow waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea, bordered by Iran to the north and Oman and the United Arab Emirates to the south.
    2. Why it matters: One fifth of the world’s seaborne oil passed through the Strait before the war, which makes its closure a global energy event rather than a regional one.

    What is the Fifth Fleet?

    1. What it is: The United States Fifth Fleet is the naval formation responsible for the Persian Gulf, the Red Sea, the Arabian Sea and parts of the Indian Ocean, headquartered in Bahrain.
    2. Why its damage matters: Its headquarters is the command node of the American naval presence in the region, so damage to it is a loss of command capacity and not only of infrastructure.

    What is a cold peace?

    1. What it is: A cold peace is a settlement in which former adversaries stop fighting and maintain functional diplomatic and economic contact without reconciling their underlying political differences or building trust.
    2. Why it is proposed here: It is the achievable objective between the Arab states and Iran, since containment has failed and full normalisation is not available.

    What triggered the threat against Oman?

    1. Oman’s original role: Oman hosted the talks between Washington and Tehran before the war was launched on 28 February, making it the diplomatic venue rather than a party to the conflict.
    2. Oman’s continuing role: Since the failed escalation, Oman, under American influence, has been talking to Iran seeking a settlement.
    3. Why the effort stalled: Iran, having survived two rounds of American bombings, refused to offer major concessions.
    4. The consequence for Oman: American frustration deepened with Oman precisely because Muscat could not deliver an Iranian concession it never had the power to extract.
    5. The nature of the threat: This is the second time the American leader has threatened to attack Oman, and the threat now falls on an ally for failing to produce a face saving deal.
    6. What the threat reveals: Instead of reassuring allies whose territory has been struck, Washington is threatening them, which is the clearest signal of declining influence in the region.

    Why has the Strait of Hormuz not reopened?

    1. Who closed it: Iran closed the Strait after it was attacked, making closure a retaliatory instrument rather than a negotiating opening position.
    2. The claimed breakthrough: When the American leader backed down from a threatened escalation after 13 days of bombing on Iran in July, he said the two sides were close to a deal on reopening the Strait.
    3. Iran’s position: Iran never said that it had agreed to any deal with the United States over the Strait.
    4. Iran’s stated preconditions: Iran issued several demands as preconditions for any agreement, including releasing frozen funds and issuing sanctions relief.
    5. The claim against the traffic data: The American President has repeatedly claimed the Strait was open, while traffic through the waterway is nowhere near pre war levels.
    6. Scale of what is blocked: The waterway carried one fifth of the world’s seaborne oil before the war, so the gap between claimed and actual traffic is a measurable global supply loss.

    What has the war done to America’s regional military position?

    1. Bases damaged or destroyed: At least 15 American bases are either damaged or destroyed.
    2. The command node hit: The damaged facilities include the Fifth Fleet Headquarters in Bahrain.
    3. Net effect on presence: The damage has substantially reduced America’s strategic presence in the region.
    4. How Iran achieved it: Tehran turned the American basing network into a liability by repeatedly striking the bases and their host countries.
    5. Iran’s own survival: Iran survived two rounds of American bombings and remained able to refuse major concessions afterwards.
    6. Failure of coercive signalling: From day one of the war, American threats and rhetoric did little to advance Washington’s strategic goals or to deter Iran.

    Why has the presence meant to protect Gulf states become the source of their danger?

    1. Both propositions held simultaneously: The bases were the guarantee of Gulf security and the reason Gulf territory was struck, and the war has resolved that ambiguity against the hosts.
    2. Iran’s targeting logic: By striking the bases and the host countries together, Tehran converted the guarantee into a cost borne by the host rather than by the guarantor.
    3. The guarantor’s response: Washington neither restored deterrence nor reassured the hosts, and has instead threatened one of them with bombing.
    4. The asymmetry of exposure: The host state’s territory, population and economy absorb the retaliation while the guarantor’s homeland does not.
    5. Why the old bargain cannot simply be repaired: Reassurance would require a demonstrated capacity to deter Iranian strikes, which two rounds of bombing failed to establish.
    6. The unresolved dependence: Gulf states have no alternative security provider of comparable capability, so recognising the failure of the arrangement does not by itself produce a substitute.

    Why has the containment of Iran failed?

    1. The record of the war: Iran absorbed two rounds of American bombing and emerged able to hold the Strait closed and to set preconditions for talks.
    2. Coercion produced no concession: Threats and rhetoric from the first day of the war neither advanced American goals nor deterred Iranian action.
    3. The cost fell on third parties: Containment’s enforcement damaged the host states of American bases rather than the target of the policy.
    4. Diplomacy was subordinated to pressure: Oman’s mediation was conducted under American influence rather than as an independent regional initiative, which limited what it could offer Tehran.
    5. The policy’s own premise collapsed: A decades old policy of isolating Iran cannot be sustained when the isolating power’s regional presence has been substantially reduced.

    What would a new regional order require?

    1. Recognition of the strategic reality: Countries in the region confront a new strategic reality in which the foundations of the old security architecture have been shaken.
    2. Abandoning containment: Gulf states must recognise that the decades old policy of containing Iran has failed.
    3. Looking past the umbrella: To ensure their own security and regional stability, the Persian Gulf countries need to look beyond the American security umbrella.
    4. The organising principle: The new order must be founded on a cold peace between the Arab states and Iran, not on reconciliation or on alliance.
    5. Regional rather than external authorship: The foundations have to be laid by the regional states themselves, since the external guarantor has demonstrated both limited capability and limited commitment.

    How does the Gulf’s shifting security order affect India’s interests?

    1. Energy dependence: India imports over 85 percent of its crude oil, and a large share of West Asian supply transits the Strait of Hormuz, so a closed Strait raises both price and freight and insurance costs.
    2. Diaspora exposure: About 90 lakh Indians live and work in the Gulf Cooperation Council states, the largest concentration of Indians anywhere outside India.
    3. Remittance dependence: The Gulf accounts for a substantial share of India’s annual remittance inflows, which exceeded $125 billion in recent years and are the country’s most stable external receipt.
    4. Trade and connectivity stakes: The India Middle East Europe Economic Corridor and India’s trade agreement with the United Arab Emirates both assume a stable and navigable Gulf.
    5. Balancing act with Iran: India’s Chabahar port investment and its connectivity route to Central Asia through Iran sit alongside its deepening partnerships with the Gulf monarchies and Israel.
    6. Strategic preference: A cold peace between the Arab states and Iran serves India better than either containment or open conflict, since India maintains working relationships across all three blocs.

    Challenges to building a new Persian Gulf regional order

    1. Absence of a regional security institution: The Gulf has no inclusive security organisation covering both the Arab states and Iran, e.g. the Gulf Cooperation Council formed in 1981 explicitly excludes Iran and Iraq.
    2. Sectarian and dynastic rivalry: Competition between Riyadh and Tehran runs through proxy conflicts that outlast any bilateral thaw, e.g. the Yemen conflict continued despite the Saudi Iran normalisation agreement brokered in Beijing in March 2023.
    3. Capability dependence on external suppliers: Gulf militaries are built on American platforms, training and sustainment, so autonomy is limited by the equipment they already own, e.g. Patriot and THAAD air defence systems in Saudi Arabia and the United Arab Emirates depend on American logistics chains.
    4. Intra Gulf divergence: The Gulf Cooperation Council states do not share a single position toward Iran, e.g. the blockade of Qatar between 2017 and 2021 was driven partly by differing approaches to Tehran.
    5. Nuclear file unresolved: No verification framework governs Iran’s nuclear programme after the collapse of the earlier agreement, e.g. the Joint Comprehensive Plan of Action of 2015 ceased to constrain enrichment after the American withdrawal in 2018.
    6. Energy chokepoint vulnerability: Any settlement leaves the Strait of Hormuz physically controllable by one party, e.g. one fifth of the world’s seaborne oil transited the Strait before Iran closed it.
    7. External power competition: China and Russia have expanding interests in the region and no shared framework with the United States, e.g. China brokered the Saudi Iran agreement of 2023 without American involvement.
    8. Domestic legitimacy constraints: Gulf rulers face internal opposition to accommodation with Iran and to visible dependence on foreign forces, e.g. Bahrain’s own political fault lines were exposed during the unrest of 2011.

    Conclusion

    The war has produced a result the Gulf states cannot reverse: at least 15 American bases damaged or destroyed including the Fifth Fleet Headquarters in Bahrain, the Strait of Hormuz still functionally closed, and an American guarantor now threatening an ally rather than reassuring it. The decades old policy of containing Iran has failed, and no external power is positioned to replace the security architecture that failure has hollowed out. What remains unresolved is whether the Persian Gulf states can construct a regional order on a cold peace with Iran while their own militaries, economies and rivalries still run through the arrangement they must replace.

  • [17th August 2026] The Hindu OpED: Mecca Pact Reshapes West Asia: Where Does India Stand?

    Why in the News

    A collective defence pact signed in Mecca between Saudi Arabia, Turkiye and Pakistan has altered the security architecture of West Asia. The pact pools Saudi capital, Pakistani military strength and Turkish defence technology, and is aimed at deterring Israel rather than Iran. India built a decade of gains in the region and now has no declared strategy to answer this realignment.

    What did India build in West Asia over the past decade?

    1. 2016, Saudi recognition: Saudi Arabia awarded India’s Prime Minister its highest civilian honour, marking a shift in the political relationship.
    2. 2021, I2U2: The I2U2 agreement was signed, tying India into a grouping with Israel, the United States and the UAE.
    3. 2024, Chabahar: Iran leased Chabahar port to India, giving overland access towards Afghanistan and Central Asia that bypasses Pakistan.
    4. The UAE relationship: India cultivated a special relationship with the UAE built on remittances from Indian expatriate workers, investments by Indian business in the UAE, and UAE strategic investments in India.
    5. Where they stand now: These are gains from the past, and India’s footprint is contracting one country at a time.

    Why is the region’s security order breaking down now?

    1. A war that spread: In the last four months the United States and Israel war with Iran escalated into a regional conflict.
    2. Iran against the Gulf: Iran attacked GCC countries, ending the assumption that the Gulf monarchies sit outside the fighting.
    3. Saudi strikes in Iraq: Saudi Arabia hit Iraqi militias.
    4. Attacks at sea: The Houthis attacked Saudi ships.
    5. Israeli strikes: Israel carried out strikes in multiple countries.
    6. The American umbrella in doubt: Gulf states are rethinking the efficacy of the United States security umbrella and now see a threat from both Iran and Israel.
    7. A schism over method: The Gulf is split between handling that threat through engagement, the UAE approach, and through deterrence, which Saudi Arabia is contemplating.

    How has Pakistan converted the regional crisis into diplomatic capital?

    1. The mediator role: Pakistan’s role as mediator in the United States and Iran conflict is earning it reputational benefits across the region.
    2. The timing: It entered when no one else could bring the United States President and the Iranians to the table.
    3. Who had failed first: Turkiye, Qatar and Egypt had all attempted mediation without success.
    4. The pact as the payoff: The Mecca collective defence pact follows directly from that diplomatic moment.
    5. The Israel risk for India: A future Israel and Pakistan war would draw India in, given the close India Israel partnership.
    6. The Turkiye risk for India: Greater Turkish support for Pakistan in a future India Pakistan conflict cannot be ruled out.

    What do the positions of individual regional states reveal about the new architecture?

    1. Saudi Arabia, deterrence and a new maritime force: Riyadh is moving from engagement to deterrence, supplies the capital leg of the Mecca pact, and is raising a Saudi led maritime force for the Red Sea that India is not part of.
    2. Turkiye, technology as leverage: Ankara contributes defence technology to the pact and runs a deepening military relationship with Pakistan that India has no channel to discuss.
    3. Pakistan, military manpower as currency: Islamabad supplies the military strength the pact rests on, converting an army into diplomatic capital with Gulf financiers.
    4. United Arab Emirates, engagement over deterrence: Abu Dhabi manages the Iran and Israel threat through engagement, and carries mounting differences with Saudi Arabia plus positions against United Nations recognised governments in conflicts as far away as Sudan.
    5. Iran, from partner to belligerent: Tehran leased Chabahar to India in 2024 and has since attacked GCC states, putting India’s connectivity asset inside an active war zone.
    6. Israel, strikes that created the pact: Israeli operations across multiple countries made three regional states conclude they are next, which is the design logic of the Mecca pact.

    Why does India’s current posture carry risk?

    1. The Israel bet: India’s approach rests on confidence in Israel’s victory, drawn from Israel’s proximity to the United States.
    2. The American consensus is shifting: Both Make America Great Again Republicans and Democratic Socialists now question the once unquestioned United States support for Israel.
    3. Israel alone: Whether Israel can prevail without assured American backing is unsettled.
    4. The UAE bet: The second pillar of India’s regional position is the UAE relationship, resting on remittances, elite investment and Emirati investment in India.
    5. UAE exposure: The UAE’s differences with Saudi Arabia and its Sudan positions place that pillar at risk.

    What are the choices before India?

    1. Formal alignment: India can sign military alliances with Israel and the UAE.
    2. The cost of alignment: That would damage what is left of India’s relationships with Iran and Saudi Arabia.
    3. Continued inaction: India can do nothing, which is the current position.
    4. Cost of inaction, seafarers: Indian merchant mariners continue to be killed in the Strait of Hormuz.
    5. Cost of inaction, shipping: More Indian ships sink in the Bab-el-Mandeb.
    6. Reputational cost: A great power in the making appears hobbled in its own immediate maritime neighbourhood.
    7. The third way: India can devise an active regional political strategy instead of choosing between alignment and drift.

    What would an active Indian regional strategy involve?

    1. Renewed engagement with Saudi Arabia: India has no explicit differences with Riyadh, which makes it the cheapest relationship to rebuild.
    2. Arab and Iran trust building: India can work to rebuild trust between Arab states and Iran, beginning with the UAE and Iran relationship.
    3. Jordan’s security: India can offer defensive technologies to Jordan at a time when United States munitions are running low.
    4. Lebanon peacekeeping: India can take a role in the future UN peacekeeping presence in Lebanon, with UNIFIL forecast to end.
    5. A back channel with Turkiye: India can share its red lines on Turkiye’s relationship with Pakistan through a quiet channel.
    6. Red Sea shipping with Egypt: If India cannot join the Saudi led maritime force, it can work with Egypt on a parallel effort to protect India bound shipping from the Suez Canal to Bab-el-Mandeb.
    7. A military presence: India can examine a presence in the Red Sea region, in Somaliland or Socotra.
    8. Exercises with the region: Existing military training exchanges can be scaled into joint drills and exercises with a range of regional states.
    9. A Special Envoy for West Asia: India can appoint one who draws all the threads together, rather than one confined to the Israel and Palestine peace process.

    Challenges to India’s West Asia Strategy

    1. The alliance trap: Any formal military alignment with one camp forecloses the other, since Iran and Saudi Arabia both read Indian alignment as a choice against them. e.g. India’s Chabahar development slowed each time United States sanctions pressure on Iran tightened.
    2. The Turkiye and Pakistan axis: Turkish defence technology transfers to Pakistan directly degrade India’s conventional edge. e.g. Turkish origin Songar armed drones were used against Indian positions during the May 2025 hostilities.
    3. Chokepoint exposure: India’s trade and energy routes converge on two narrow straits it cannot secure alone. e.g. Houthi attacks from late 2023 forced Indian bound shipping to reroute around the Cape of Good Hope, raising freight and insurance costs.
    4. Attacks on Indian crewed shipping: Indian seafarers crew a large share of global merchant vessels and absorb the human cost of regional escalation. e.g. the drone strike on MV Chem Pluto off Porbandar in December 2023.
    5. Evacuation burden: Every escalation converts India’s diaspora presence into a mass evacuation operation. e.g. Operation Kaveri from Sudan in 2023 and Operation Sindhu from Iran and Israel in June 2025.
    6. No standing regional mechanism: India has no dedicated envoy or regional platform to convert bilateral goodwill into collective influence. e.g. the piece’s own recommendation for a Special Envoy for West Asia has no existing counterpart in the Indian system.
    7. Exclusion from new regional security structures: New arrangements are being built without Indian participation. e.g. the Saudi led Red Sea maritime force, which India is not part of.

    Conclusion

    West Asia’s security architecture is being rebuilt around a Saudi Arabia, Turkiye and Pakistan pact designed to deter Israel, and India has no strategy that matches the scale of that change. Formal alignment with Israel and the UAE costs India Iran and Saudi Arabia, and inaction costs it seafarers, ships and standing. The workable route is an active regional political strategy built on renewed engagement with Riyadh, trust building between the Arab states and Iran, and a dedicated envoy. India’s capacity to shape the region survives, its window does not.

    West Asia in India’s Foreign Policy

    1. About: West Asia covers the Gulf monarchies, Iran, Iraq, Israel, Turkiye and the Levant, treated in Indian policy as an extended neighbourhood rather than a distant theatre.
    2. Policy label: India’s approach shifted from Look West to Link West, moving beyond oil and labour transactions towards defence, technology and investment partnerships.
    3. Energy: West Asia remains a principal source of India’s crude oil imports, and Qatar is India’s largest supplier of liquefied natural gas.
    4. Diaspora: About 9 million Indians live and work in the Gulf, the largest concentration of the Indian diaspora anywhere.
    5. Remittances: India is the world’s largest recipient of remittances, receiving over 100 billion dollars annually, with the Gulf a major contributor.
    6. Trade: The UAE is among India’s top three trading partners, and the India UAE Comprehensive Economic Partnership Agreement took effect in May 2022.
    7. Connectivity: The India Middle East Europe Economic Corridor (IMEC) was announced on the margins of the G20 New Delhi Summit in September 2023.

    Back2Basics: Gulf Cooperation Council

    1. Formation: Established in 1981 at Abu Dhabi.
    2. Headquarters: Riyadh, Saudi Arabia.
    3. Members: Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain and Oman.
    4. Mandate: Coordination and integration among members in economic, defence, security and cultural affairs.
    5. Military arm: The Peninsula Shield Force, a joint military force raised in 1984.
    6. Economic instrument: A unified economic agreement and a customs union among the six members.
    7. India link: India is not a member, and engages the bloc through bilateral strategic partnerships and an India GCC ministerial mechanism.

    Government Initiatives for India’s West Asia Engagement

    1. Link West Policy: Reframes the Gulf and West Asia as a zone of strategic partnership rather than an energy and labour market alone.
    2. I2U2: Joint investment platform with Israel, the United States and the UAE across food security, clean energy and health.
    3. India Middle East Europe Economic Corridor: Rail and shipping corridor linking India to Europe through the Gulf, announced in September 2023.
    4. India UAE Comprehensive Economic Partnership Agreement, 2022: India’s first Gulf trade agreement, cutting tariffs on the bulk of traded goods.
    5. Chabahar long term contract, 2024: A ten year agreement for operating the Shahid Beheshti terminal, giving India a port outside the Strait of Hormuz.
    6. eMigrate portal and Pravasi Bharatiya Bima Yojana: Registration and mandatory insurance cover for Indian workers emigrating to Gulf destinations.
    7. Evacuation operations: Operation Sindhu, Operation Ajay and Operation Kaveri, evacuating Indians from Iran and Israel, Israel and Sudan respectively.
    8. Operation Sankalp: Indian Navy deployment in the Gulf of Oman and the Persian Gulf to escort Indian flagged merchant shipping.

    Key Facts about India and West Asia

    1. The Strait of Hormuz carries roughly a fifth of global oil consumption and has no practical bypass for most Gulf exporters.
    2. The Bab-el-Mandeb is the southern gate of the Red Sea and the compulsory approach to the Suez Canal.
    3. Chabahar is Iran’s only oceanic port, on the Gulf of Oman, and lies outside the Strait of Hormuz.
    4. India’s overseas military logistics access includes Duqm in Oman, agreed in 2018.
    5. I2U2 was agreed in 2021 and held its first leaders summit in July 2022.
    6. India is not a member of the Organisation of Islamic Cooperation, and was invited as guest of honour to its foreign ministers meeting at Abu Dhabi in 2019.
    7. The GCC has six members; the wider Arab League has 22.

    “[2025, GS2, 15 marks] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?”

  • India’s rising dependence on U.S. LPG

    Why in the news?

    The Union Minister of Petroleum and Natural Gas stated that 67 per cent of India’s liquefied petroleum gas (LPG) now comes from the United States, a drastic shift from an earlier decision to source about 10 per cent of cooking gas there. The pivot, driven by the crisis in the Strait of Hormuz, exposes that LPG security cannot be anchored to a single geography while dependence on the United States carries risks of its own.

    What is Liquefied Petroleum Gas (LPG) and how is India’s supply structured?

    1. What it is: LPG is a mix of propane and butane used mainly as cooking gas in India. It is a politically volatile fuel because shortages carry direct social and political consequences.
    2. Import dependence: India, the world’s second largest importer of LPG, imports about 60 per cent of the LPG it consumes, with nearly 90 per cent of that passing through the Strait of Hormuz.
    3. Sourcing shift: State run refiners signed a long term deal for 2.2 million tonnes of United States LPG in 2026, raising the United States share to two thirds of imports.

    Why did India pivot to United States LPG?

    1. Hormuz disruption: Disruptions in the narrow Strait of Hormuz threatened the Gulf supply route through which most Indian LPG passes.
    2. Collapse in West Asian flows: India’s LPG imports from West Asia fell almost 85 per cent between February and June 2026.
    3. Partial offset: India replaced the lost flows by lifting imports from other sources, including the United States, from where June imports reached 0.77 million metric tonnes.
    4. Availability over price: Because cooking gas is politically sensitive, the priority is making it available rather than optimising cost, so costlier United States cargoes became attractive during the crisis.

    Why is overdependence on the United States risky?

    1. Energy as leverage: Relying more on a partner that views ties through the lens of national interest risks energy being used as a bargaining tool in bilateral trade talks.
    2. History of coercive tools: The United States has historically used financial sanctions, export controls, and technology denial as foreign policy tools, seen in Iran, Iraq, Cuba, North Korea, Syria, Russia, Venezuela, Myanmar, Libya, Sudan, and Afghanistan.
    3. Third country reach: The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, proposing tariffs of up to 100 per cent on the top five buyers of Russian oil and natural gas, is a non tariff trade barrier that can influence third country transactions.
    4. Monetary spillover: Import dependence complicates monetary policy, as elevated United States inflation could keep the Federal Reserve’s rates higher for longer, strengthening the dollar and raising the rupee cost of each cargo.

    Why does proximity pricing matter?

    1. Definition: Proximity pricing is a market benefit where goods cost less when bought from a nearby place. Shorter travel distance means lower shipping costs and faster delivery.
    2. Loss of distance advantage: United States shipments take 25 to 35 days against 5 to 10 days from the Gulf, so India loses the advantage of proximity pricing.
    3. Two price benchmarks: United States LPG is Mont Belvieu propane based, while West Asian supply follows the Saudi Aramco Contract Price, and the Gulf fuel is usually cheaper at the disembarking point due to the shorter distance.
    4. Temporary reversal: Geopolitical risk has temporarily inflated West Asian supply costs, with the Saudi Contract Price rising from about 543 dollars per tonne in February to around 790 dollars in June, making United States cargoes competitive despite the longer voyage.

    How does India balance availability with cost optimisation?

    1. The core trade off: For a politically volatile fuel, ensuring supply outweighs cost optimisation, so India accepted higher priced United States cargoes to cut supply risk.
    2. Residual exposure: India may have cut Hormuz risk, but remains exposed to commodity price, dollar, and freight risks.
    3. Under recovery pressure: If domestic prices are held down while global prices rise amid rupee depreciation, oil companies’ under recoveries expand, worsening fiscal and external sector stress.

    What are the challenges to India’s LPG security?

    1. Single supplier concentration: Two thirds reliance on one country recreates the concentration risk the pivot was meant to solve.
    2. Stagnant domestic output: LPG production has stayed nearly flat while consumption grows, widening the import gap.
    3. Chokepoint vulnerability: Heavy dependence on the Strait of Hormuz leaves Gulf sourced volumes exposed to any regional conflict.
    4. Fiscal drain: Accumulated under recoveries of state oil marketing companies exceeded Rs 59,000 crore as of 31 July 2026.
    5. Currency and freight risk: Dollar denominated pricing and long shipping routes expose landed costs to exchange rate and freight swings.
    6. Thin strategic reserves: India lacks large dedicated LPG strategic reserves to buffer sudden supply shocks.

    Conclusion

    Energy security is not about replacing one supplier with another but ensuring no single player holds all the cards. India must strengthen local production, bolster multiple supply chains, and build more strategic reserves. Australia offers a shorter Indo Pacific route outside Hormuz, though its export volumes remain small.

    Back2Basics

    Energy Security and LPG in India (Foundational Context)

    1. About: Energy security means assured availability of energy at affordable prices with resilience against supply shocks. LPG security is a subset covering cooking gas access for households.
    2. Scale: Public sector oil marketing companies serve 33.14 crore active domestic LPG customers, growing at a compound annual growth rate of 7.6 per cent between 2015 and 2026.
    3. Consumption gap: LPG production was 4.3 million metric tonnes against consumption of 6.5 million metric tonnes in the first quarter of FY27, with the 2026-27 consumption estimate at 34,692 thousand metric tonnes.

    Key Facts about India’s LPG Sector

    1. Oil marketing companies: Indian Oil, Bharat Petroleum, and Hindustan Petroleum are the three public sector oil marketing companies distributing LPG.
    2. PPAC: The Petroleum Planning and Analysis Cell tracks LPG consumption, customer base, and pricing data.
    3. Crisis production ramp up: At the peak of the crisis, oil marketing companies raised cumulative daily LPG production from 34,000 metric tonnes to 55,000 metric tonnes.
    4. Output jump: First quarter FY27 LPG production rose 35.73 per cent year on year to 4.26 million metric tonnes after refineries diverted propane and butane streams into the LPG pool.

    Government Initiatives for LPG and Energy Security

    1. Pradhan Mantri Ujjwala Yojana: Provides free LPG connections to women from below poverty line households to promote clean cooking.
    2. PAHAL (DBTL): Directly transfers LPG subsidy to beneficiary bank accounts to curb diversion.
    3. Strategic Petroleum Reserves: Underground crude storage to cushion supply disruptions.
    4. Ethanol Blending Programme: Reduces import dependence in the broader energy basket.
    5. Long term supply agreements: State refiner contracts diversifying LPG sourcing across geographies.

    Way Forward

    1. Boost domestic output: Maximise refinery LPG yield and invest in production capacity to narrow the import gap.
    2. Diversify suppliers: Spread sourcing across the Gulf, the United States, Australia, and others to avoid single supplier dependence.
    3. Expand strategic reserves: Build dedicated LPG storage to buffer sudden shocks.
    4. Hedge price and currency risk: Use financial instruments to manage commodity, dollar, and freight exposure.
    5. Secure alternate routes: Develop supply chains outside the Strait of Hormuz to reduce chokepoint vulnerability.

    PYQ Relevance

    [UPSC 2025] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?

    Linkage: The PYQ directly relates to energy security as a key driver of India’s foreign policy, especially in West Asia. India’s shift to US LPG highlights the need for supplier diversification, alternate routes and strategic autonomy in energy diplomacy.