India Paid USD 22.5 Billion More For Fossil Fuel Imports Amid Strait Of Hormuz Energy Shock: CREA

Lucknow: India has emerged as the second-largest casualty among major fossil fuel importing countries from the energy price shock triggered by the crisis around the Strait of Hormuz, with the country paying an estimated USD 22.5 billion more for fossil fuel imports between March and August 2026, according to an analysis by the Centre for Research on Energy and Clean Air (CREA).

The additional cost comes as disruption to global shipping and energy markets following the US-Israeli attacks on Iran on February 28 pushed oil and gas prices sharply above levels markets had expected before the conflict. Globally, the crisis has added more than USD 330 billion to fossil fuel import bills over six months, with importing countries paying about USD 55 billion more every month.

For India, which depends heavily on imported crude oil and is also a major importer of liquefied natural gas, the surge in international energy prices has translated into a substantial increase in the cost of meeting domestic fuel and energy requirements.

India among worst-hit importers

China recorded the highest additional fossil fuel import cost at USD 35.5 billion, followed by India at USD 22.5 billion. The United States was third at USD 16.5 billion. The Netherlands, South Korea and Italy followed with additional costs of USD 13.5 billion, USD 13.2 billion and USD 12.7 billion respectively.

The CREA analysis found that crude oil alone accounted for USD 164 billion of the additional global import bill, with prices averaging 35% above what markets had priced in before the strikes. The increase was sharper for several refined petroleum products.

Impact on fuel prices

Diesel and gasoil prices were 59% higher than pre-war expectations, adding USD 74 billion to the global import bill. Gasoline prices rose 43%, adding USD 36 billion, while LNG prices increased 60% in the Atlantic basin and 75% in the Pacific, adding USD 38 billion. Jet fuel prices rose 59%, adding another USD 20 billion.

The diesel shock is particularly significant for economies such as India because diesel is widely used in freight movement, agriculture and industry. CREA said 134 of the 170 countries covered in its analysis paid more for diesel than pre-war futures had indicated.

The diesel price premium remained above 55% for five of the six months analysed, falling to 43% in June before rising again to 65% in August.

Clean energy reduces exposure

The analysis also highlights the role of clean energy in reducing exposure to international fossil fuel prices. Countries that added clean power capacity since 2020 collectively avoided an estimated USD 36 billion in coal, gas and oil imports during the first five months of the crisis.

The savings are particularly important during a supply shock because countries with greater domestic clean power capacity need to buy less fossil fuel when international prices surge. Of the USD 36 billion saved, CREA estimates that USD 10.6 billion represented savings directly attributable to the higher wartime prices.

Burden on poorer economies

The burden of the crisis has been heavier for poorer economies. Low and lower-middle-income countries paid an additional amount equivalent to 1% of their 2024 GDP because of higher fossil fuel costs, compared with 0.45% for high-income countries.

CREA compared the prices actually paid by importing countries for seaborne crude, refined fuels and gas between March and August 2026 with futures prices prevailing during the 12 days before the February strikes. The analysis covers 170 countries. Actual ship-tracked cargo arrivals between March and July accounted for USD 281.7 billion of the additional cost, while August figures were partly modelled because shipping data had not fully settled.

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Study highlights India’s vulnerability

The study does not include pipeline gas, coal, fuel oil, naphtha, freight charges or war-risk insurance. CREA said these exclusions mean the USD 330 billion estimate is conservative.

For India, the findings underline the vulnerability created by dependence on imported fossil fuels. The USD 22.5 billion additional bill places India among the countries that have paid the highest price for the prolonged disruption in global energy markets.

India's position in the CREA ranking is particularly notable because the additional cost is not simply a reflection of higher import volumes. The study measures the premium paid over prices that markets had expected before the conflict, meaning the figure captures the impact of the war-related price shock on actual fossil fuel purchases.