Trump-Netanyahu war has turned the Strait of Hormuz into a massive single point of failure for India.
India’s economic growth and energy security are now exposed to the volatile front lines of the Middle East conflict. By slashing imports of discounted Russian oil to their lowest level since March 2022 and ramping up purchases of higher-priced Middle Eastern and U.S. crude, India has made itself acutely vulnerable to rising oil prices and to disruptions of tanker traffic through the Strait of Hormuz in the wake of the Trump-Netanyahu war on Iran.Roughly 50% of India’s oil imports and 60% of its LNG purchases now pass through Hormuz. The vulnerability is even more pronounced for cooking gas (LPG): nearly 80-85% of India’s LPG is sourced from the Gulf and must transit the strait. Unlike crude, India maintains no strategic reserves of LPG, meaning any disruption would quickly hit households directly.
In effect, the Trump-Netanyahu war has turned the Strait of Hormuz into a massive single point of failure for India. By aligning more closely with the U.S.-Israel axis against Iran, India has traded a price risk (the loss of Russian discounts) for a supply risk (deepened dependence on Hormuz).
The economic consequences of Modi’s costly bet are significant. Every $10 increase in oil prices adds roughly $13-14 billion to India’s annual import bill, putting upward pressure on inflation and widening its overall trade deficit. Simply put, India will pay a steep price for the war — even as Trump calls Modi a “very close friend” and Netanyahu describes him as a “brother.” Under pressure from the Trump administration, India agreed to curb Russian purchases in exchange for relief from punitive U.S. tariffs, which had reached as high as 50%.
China, by contrast, can mitigate the Hormuz risk by simply stepping up purchases of Russian oil and gas via overland routes. In effect, India’s decision to curb Russian imports has handed its principal adversary an advantage: Beijing can absorb additional Russian supplies at a critical juncture, insulating itself from Gulf disruptions while New Delhi becomes more exposed to them.
