BT EXPLAINER: What removing sanctions on Iran oil could mean to India?
India can acquire some of the Iranian oil on the high seas to meet immediate needs and keep the India basket rates in control.
- Mar 20, 2026,
- Updated Mar 20, 2026 5:34 PM IST
As the Iran war enters the third week, the real worry for policymakers is the economic impact that the sustained rise in prices of crude oil and liquefied natural gas (LNG) will have on the Indian economy. Brent crude is now hovering at $105-107 per barrel, a 44% increase over the $73 per barrel that prevailed just before the war started. The Indian crude oil basket is already at a much higher $156.29 per barrel, primarily due to higher logistics and insurance costs incurred on moving oil from West Asia.
That’s where US Treasury Secretary Scott Bessent’s statement that US President Donald Trump is considering lifting sanctions on Iranian oil that is already in transit comes as a boon. “In the coming days, we may un-sanction the Iranian oil that is on the water. It is about 140 million barrels,” Bessent said on Fox Business Network. That’s close to two weeks of supply on the high seas.
The US has been looking to keep energy prices in check ever since Iran imposed curbs on tankers transiting through the Strait of Hormuz. This move is quite in sync with the US allowing the sale of sanctioned Russian oil stranded on tankers—about 130 million barrels—to keep oil prices in check earlier this month.
While almost 95 nations across the world have hiked fuel prices in March, it was only on 20 March that state-owned oil marketing companies in India have hiked the price of premium fuels by over Rs2 a litre. There has been no increase yet in the prices of regular petrol. That is because state elections are due to be held in four states and one union territory in April. But they could soon be running out of options.
The Iran impact
That’s where the availability of large cargoes of Iranian oil comes in handy. Once the 140 million barrels of Iranian oil on the high seas are available, crude oil prices will remain in check. Second, India too can acquire some of the Iranian oil to meet its immediate needs and keep the India basket rates in control.
India was a steady buyer of Iranian crude until the United Nations Security Council imposed sanctions on Iran in June 2010 over concerns about its expanding nuclear programme. In 2011, the United States sanctioned the Central Bank of Iran and threatened to penalise foreign banks purchasing Iranian oil. That’s when India started scaling back on Iranian oil imports. By 2014-15, Iran accounted for only 5.7% of India’s global crude purchases, less than half of what it bought before the sanctions.
When sanctions were lifted in 2016, India started to import more Iranian crude. It rose to 12.7% of India’s crude oil imports in 2016-17. India has not been buying Iranian crude since mid-2019, after the US ended waivers for sanctions on Iranian crude. It was gradually replaced by West Asian and US grades. Things changed in 2022, when India started purchasing Russian crude at a discount after the Ukraine war started.
Much of the 140 million barrels of Iranian crude now on the seas is headed to the world’s largest importer—China. The easing of sanctions would ensure that more oil will flow to global markets, keeping oil prices in check and, in turn, reducing Iran’s leverage over the Strait of Hormuz.
Meanwhile, Saudi Arabia’s oil officials are working on the premise that crude oil could touch $180 per barrel if the war continued till the end of April. This is based on the attacks on core oil infrastructure in the region.
As the Iran war enters the third week, the real worry for policymakers is the economic impact that the sustained rise in prices of crude oil and liquefied natural gas (LNG) will have on the Indian economy. Brent crude is now hovering at $105-107 per barrel, a 44% increase over the $73 per barrel that prevailed just before the war started. The Indian crude oil basket is already at a much higher $156.29 per barrel, primarily due to higher logistics and insurance costs incurred on moving oil from West Asia.
That’s where US Treasury Secretary Scott Bessent’s statement that US President Donald Trump is considering lifting sanctions on Iranian oil that is already in transit comes as a boon. “In the coming days, we may un-sanction the Iranian oil that is on the water. It is about 140 million barrels,” Bessent said on Fox Business Network. That’s close to two weeks of supply on the high seas.
The US has been looking to keep energy prices in check ever since Iran imposed curbs on tankers transiting through the Strait of Hormuz. This move is quite in sync with the US allowing the sale of sanctioned Russian oil stranded on tankers—about 130 million barrels—to keep oil prices in check earlier this month.
While almost 95 nations across the world have hiked fuel prices in March, it was only on 20 March that state-owned oil marketing companies in India have hiked the price of premium fuels by over Rs2 a litre. There has been no increase yet in the prices of regular petrol. That is because state elections are due to be held in four states and one union territory in April. But they could soon be running out of options.
The Iran impact
That’s where the availability of large cargoes of Iranian oil comes in handy. Once the 140 million barrels of Iranian oil on the high seas are available, crude oil prices will remain in check. Second, India too can acquire some of the Iranian oil to meet its immediate needs and keep the India basket rates in control.
India was a steady buyer of Iranian crude until the United Nations Security Council imposed sanctions on Iran in June 2010 over concerns about its expanding nuclear programme. In 2011, the United States sanctioned the Central Bank of Iran and threatened to penalise foreign banks purchasing Iranian oil. That’s when India started scaling back on Iranian oil imports. By 2014-15, Iran accounted for only 5.7% of India’s global crude purchases, less than half of what it bought before the sanctions.
When sanctions were lifted in 2016, India started to import more Iranian crude. It rose to 12.7% of India’s crude oil imports in 2016-17. India has not been buying Iranian crude since mid-2019, after the US ended waivers for sanctions on Iranian crude. It was gradually replaced by West Asian and US grades. Things changed in 2022, when India started purchasing Russian crude at a discount after the Ukraine war started.
Much of the 140 million barrels of Iranian crude now on the seas is headed to the world’s largest importer—China. The easing of sanctions would ensure that more oil will flow to global markets, keeping oil prices in check and, in turn, reducing Iran’s leverage over the Strait of Hormuz.
Meanwhile, Saudi Arabia’s oil officials are working on the premise that crude oil could touch $180 per barrel if the war continued till the end of April. This is based on the attacks on core oil infrastructure in the region.