India weighs return to Iranian oil as supply crunch deepens

India is considering a return to importing Iranian crude as mounting supply disruptions and rising global tensions expose vulnerabilities in its energy security.

Senior executives at Indian refineries said they are preparing to resume purchases from Iran following a temporary easing of US sanctions, though they are awaiting formal direction from the government and clarity from Washington on payment mechanisms and compliance rules.

The Hindu reported that the move comes amid a broader energy crunch triggered by the ongoing conflict involving the United States, Israel and Iran, which has disrupted key supply chains across West Asia. Indian refiners are grappling with tightening inventories after interruptions in regional energy flows, including issues affecting liquefied natural gas supplies from Qatar and crude shipments linked to other Gulf producers.

Washington’s latest sanctions waiver, issued for a limited period, allows the release of Iranian oil already in transit into global markets in an effort to stabilise prices and ease shortages. However, the exemption does not permit fresh production or new long-term contracts, leaving refiners with only a narrow window to secure supplies.

Industry sources said Indian companies, including major state-run and private refiners, are keen to act quickly if permitted, having previously turned to discounted Russian crude to manage costs. With those flows now constrained and geopolitical risks mounting—including concerns around key shipping routes—India faces increasing pressure to diversify its sources of energy.

Refiners elsewhere in Asia are also assessing a potential return to Iranian oil, but uncertainties remain over logistics, payments and the risk of sanctions snapping back once the temporary relief expires.

The situation underscores the tightrope India must walk between securing affordable energy and navigating complex geopolitical alignments. Any delay or misstep could exacerbate domestic fuel pressures, particularly as global markets remain volatile.

Meanwhile, regional tensions continue to escalate, with Iran launching fresh missile and drone attacks across the Middle East. The evolving conflict has added urgency to efforts by major economies to secure stable energy supplies.

For India, the immediate challenge lies in balancing diplomatic considerations with the pressing need to ensure uninterrupted fuel availability—highlighting how exposed it remains to external shocks in an increasingly uncertain global energy landscape.

With PTI, IANS inputs