Hormuz Crisis Increases India's Fossil Fuel Import Costs by $22 Billion: CREA

The Hormuz crisis has led to a $22 billion increase in India's fossil fuel import costs between March and August 2026, as per the Business Standard news report.  

This energy price shock, following the US-Iran war, has positioned India as the second-most affected importing country after China. 

Economic Impact on India 

India's net additional cost across all fossil fuels was estimated at $14.4 billion, equivalent to 0.38% of its GDP, or about 1.4 days of national income.  

The country's additional cost was the third-highest among major fossil-fuel importers, after the European Union at $78 billion and China at $35 billion. 

India's net additional cost for crude oil stood at $20.5 billion as per an analysis by the Centre for Research on Energy and Clean Air (CREA),. 

Global Fossil Fuel Import Costs 

Fossil-fuel importers globally paid a gross extra cost of $330 billion for seaborne crude oil, oil products, and LNG in the six months following the US-Iran war.  

Crude oil accounted for the largest share at $164.1 billion, followed by diesel and gasoil at $73.8 billion, gasoline at $35.7 billion, LNG at $38 billion, and jet fuel at $20 billion. 

Read More: HCLTech and WACKER Partners to Establish Global Capability Centre in India! 

Crude Oil Price Surge 

Brent crude oil prices peaked at almost twice their pre-strike level and averaged 38% above that level since. Brent spot prices averaged $93 a barrel between March and August 2026, marking the highest six-month average since December 2022. 

Impact on Refined Fuels and LPG 

The pressure on refined fuels has been more persistent than on crude. Diesel prices were 65% higher than expectations in August. India's LPG imports were affected, with the import bill reaching about $4.7 billion, of which $1.1 billion was due to the price shock. 

Clean Energy's Role 

Clean-power generation capacity added since 2020 saved importing countries $36 billion in coal, gas, and oil imports during the first five months of the crisis. India was among the countries with significant savings. 

Conclusion 

The Hormuz crisis resulted in a $22 billion increase in India's fossil fuel import costs, impacting its GDP by 0.38%. The global fossil fuel importers faced a gross extra cost of $330 billion. Clean energy expansion helped mitigate some of these costs. 

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