The fragile peace in the Gulf has been shaken once again. Late on Tuesday, the US Central Command said it had carried out a fresh round of “powerful strikes” on Iran. The attacks came just hours after three commercial oil tankers, including the Qatari-flagged Al Rekayyat, were hit by projectiles and a drone while passing through the Strait of Hormuz.
Soon after the military action, the US Treasury also announced another major step. It cancelled the temporary licence that had allowed Iran to legally sell its crude oil, petrochemicals and refined petroleum products in the international market.
The combined military action and the return of sanctions mark one of the biggest escalations since the United States and Iran signed an interim memorandum of understanding on June 17 to reduce tensions after the war that began in February.
The oil waiver that barely got used
Until Tuesday, the US had given Iran temporary relief from sanctions. Under a general licence announced as part of the ceasefire framework, Iran was allowed to produce, deliver and sell crude oil, petrochemicals and refined products until August 21, 2026. It was the first major opportunity in years for Iran to legally export its oil.
The move had briefly opened the possibility of Iranian crude returning to Asian markets, including India. However, that opportunity was hardly used.
Indian state-owned refiners had already secured crude cargoes for July and August from other suppliers before the waiver was announced. At the same time, Middle Eastern crude had become cheaper after shipping slowly resumed through Hormuz following the ceasefire. Russia was also continuing to offer discounted oil, giving Indian refiners little reason to immediately buy from Iran.
India had briefly imported Iranian crude in April during an earlier and shorter sanctions exemption. Oil ministers from India and Iran had also discussed possible cooperation on the sidelines of the BRICS Energy Summit last month.
But with the latest US decision, that option has disappeared for now. Any Indian company importing Iranian crude again could face secondary US sanctions. Considering the already sensitive trade relationship between India and Washington, Indian refiners are unlikely to take that risk.
India had already prepared for possible disruptions
Even before the latest attacks, analysts believed India was in a relatively strong position. According to Kpler analyst Sumit Ritolia, Indian refiners imported a record 4.93 million barrels of crude oil per day in June, the highest ever for that month.
Russian crude imports also climbed to around 2.6 million barrels per day, making Russia India’s biggest oil supplier. Indian refiners usually book crude shipments one to two months in advance. That means much of India’s oil requirement for July and August had already been secured before the latest escalation.
Apart from Russia, India has also been sourcing crude from Africa, Venezuela and other producers, while higher output from OPEC+ has increased supplies in the global market.
Before this week’s strikes, Ritolia had expected only a small number of Iranian cargoes to arrive in July and August. He believed any larger return of Iranian oil would depend on the US extending the waiver beyond August 21. The latest US Treasury decision has effectively ended that possibility.
“At this stage, we do not expect any meaningful increase in Iranian crude imports into India. Even if limited cargoes materialise, Indian refiners are already largely covered through the first half of August, leaving little immediate need for additional purchases,” Ritolia said.
Why oil markets are worried, but not panicking
Oil prices did rise after the latest developments. Brent crude futures extended their gains after news of the US strikes and Iran’s earlier missile attacks on US military assets in Bahrain and Kuwait.
Still, markets have seen several rounds of escalation since the conflict began in February. At that time, fighting had almost completely shut the Strait of Hormuz and briefly pushed Brent crude above $120 a barrel.
Since then, prices have eased because OPEC+ increased production and some tanker traffic resumed through alternative routes around Oman.
For India, the immediate concern is not whether enough oil is available today. Since refiners buy crude well in advance, any disruption on July 8 is more likely to affect contracts for August and September rather than create an instant shortage.
If the conflict continues, the bigger impact could come through higher shipping costs and rising war-risk insurance premiums, which would make future crude imports more expensive. Earlier this year, the oil ministry said India was importing crude from more than 40 countries, reducing dependence on any single supplier.
Hormuz remains biggest concern
Nearly one-fifth of the world’s oil and LNG trade passes through this narrow shipping route. Even after the ceasefire, shipping had only partially recovered and remained vulnerable to fresh attacks like the ones seen this week. Analysts at the Atlantic Council have pointed out that Iran’s own crude exports had already dropped sharply because of damage to its energy infrastructure and continued disruptions.
Iran had been exporting around 1.8 million barrels per day earlier this year, but that figure had fallen to nearly 720,000 barrels per day by June. This means Iranian oil was never expected to become a major source of supply for India, even if sanctions had remained relaxed.