Govt vows to shield energy consumers from Iran war fallout amid crude oil surge

The world’s most populous nation, which imports nearly 90% of its oil, is highly exposed to rising prices.

• India pledges to protect consumers as oil prices surge above $100
• Government monitors oil supply risks, may offset impact if needed
• India calls for peace and diplomacy amid Iran conflict and supply issues

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Indian officials pledged to protect consumers as the Iran conflict pushed oil prices above $100 and disrupted supplies, raising significant risks for the energy-importing economy.

The country has enough oil reserves to weather the impact in the short run, government officials familiar with the matter said. If oil prices remain above $100 a barrel for a longer period, the implications may be more significant for inflation and trade, the officials said, asking not to be identified in order to discuss private matters.

With risks building, the government is monitoring the volatile situation to assess the implications for Asia’s third-largest economy and will consider measures to offset the impact if needed, the people familiar said.

New Delhi has previously moved to shield consumers from global crude spikes. In 2022, when crude prices rose to about $116 a barrel after Russia’s invasion of Ukraine, the government reduced excise duties on petrol and diesel to allow state-run fuel retailers to hold prices steady despite higher costs. Similarly, in 2008, when crude hit a record $147, the government cut import and excise duties to ease inflation.

The world’s most populous nation, which imports nearly 90% of its oil, is highly exposed to rising prices. The central bank in 2025 estimated that a 10% rise in oil prices would push up inflation by about 30 basis points and trim economic growth by roughly 15 basis points, assuming the increase is fully passed on to consumers.

Financial markets are already reflecting those concerns. India’s benchmark NSE Nifty 50 Index is down about 10% since its January peak, set to enter a technical correction, while the rupee weakened to a fresh record low on Monday.

India’s finance ministry sought to allay those concerns on Monday. “Given that India’s inflation is near the lower bound, the impact on inflation is not estimated to be substantial at this point,” Finance Minister Nirmala Sitharaman said in response to a lawmaker’s question in Parliament. Inflation has remained well within the Reserve Bank of India’s 4% target for several months.

External Affairs Minister S. Jaishankar told lawmakers in Parliament on Monday that protecting Indian consumers is the main priority for the government.

“For us, the interest of the Indian consumer has and will always be the overriding priority,” Jaishankar said. “Where required, Indian diplomacy has supported the endeavors of our energy enterprises in this volatile situation.”

Indian refiners are moving quickly to buy Russian oil, with million of barrels floating in Asian waters offering a quick fix to a Middle East supply crunch after the US relaxed restrictions on the trade, Bloomberg News said last week.

“Our national interest, including energy security and trade source, will always be paramount,” the foreign minister said. “Government remains committed to ensuring that fully, taking into accountability costs and risks of the energy markets.”

Fuel retailers in India increased the price of liquefied petroleum gas — the most widely used fuel for cooking — within days after the war in Iran, marking the first hike for household consumers in almost a year.

India, the world’s third-largest LPG consumer, sources more than 90% of its imports from the Middle East. Much of that supply transits the Strait of Hormuz, which is now effectively closed to traffic, squeezing shipments of a fuel widely used for cooking across the country.

Jaishankar said India wants to ensure peace in the region through dialog and diplomacy, reiterating Prime Minister Narendra Modi’s comment made last week.

“India is in favor of peace and urges a return to dialog and diplomacy. We advocate deescalation, restraint and ensuring the safety of civilians,” said Jaishankar.