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India incurred an estimated $22 billion in gross additional fossil-fuel import costs between March and August 2026, following the energy-price shock triggered by the Hormuz crisis, making it the second-most affected importing country after China. According to an analysis by the Centre for Research on Energy and Clean Air (CREA), India’s net additional cost for crude oil stood at $20.5 billion.
How big was the economic impact?
In terms of economic impact, India’s net additional cost across all fossil fuels was estimated at $14.4 billion, equivalent to 0.38 per cent of its gross domestic product (GDP), or about 1.4 days of national income.
India’s additional cost between March and August was the third-highest among major fossil-fuel importers, after the European Union at $78 billion and China at $35 billion, according to CREA’s analysis of seaborne crude oil, oil products and liquefied natural gas (LNG). The figures measure the additional amount importers paid over what futures markets had expected before the strikes.
According to CREA, fossil-fuel importers 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, compared with what pre-war futures markets had expected they would pay over the same period.
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 across the two basins, and jet fuel at $20 billion. The estimated gross additional cost to importers does not account for additional earnings by countries that also export fossil fuels.
The US-Iran war has caused the largest sustained oil price shock since the 1990 Gulf War. Among importers, the typical low- or middle-income country paid about twice as much relative to GDP as the typical high-income country. The cost of the crisis to fossil-fuel importers was equivalent to all global investments in renewable power in 2025, on a per-month average basis.
How sharply did crude oil prices rise?
Brent crude oil prices peaked at almost twice their pre-strike level in the weeks after the strikes and have averaged 38 per cent above that level since. Of the major supply shocks of the past three decades, only the 1990 Gulf War recorded a larger increase.
Oil traded above its pre-strike level on 94 per cent of trading days. Brent crude briefly fell below pre-strike levels in late June 2026, before spiking to $105 a barrel on July 23 and then easing. The July average stood at $84 a barrel. Brent spot prices averaged $93 a barrel between March and August 2026. No six-month period has recorded an average Brent price that high since the price spike that ended in December 2022, when markets were still absorbing the impact of Russia’s full-scale invasion of Ukraine.
Fuel price pressures persist
The pressure on refined fuels has proved more persistent than on crude. CREA said the crude premium over pre-war expectations roughly halved from 50 per cent in May to 22 per cent in August.
In contrast, diesel was 57 per cent above expectations in March and 65 per cent higher in August. European gas prices rose from 44 per cent above expectations in June to 76 per cent in August, while Asian LNG prices increased from 64 per cent to 98 per cent above expectations over the same period.
LPG shock reaches India’s cooking fuel market
The Hormuz crisis also affected India’s LPG imports. According to CREA estimates, India paid 29 per cent more per tonne for imported LPG than the market had expected during the six months following the strikes, while import volumes were 26 per cent lower.
India’s LPG import bill during the six months was about $4.7 billion, of which roughly one-fifth represented the additional cost caused by the price shock. CREA estimated the additional LPG import cost at $1.1 billion over the full six months. The disruption was sharpest in March, when India’s LPG imports fell 49 per cent from the average level of the previous two years. Volumes subsequently recovered to 86 per cent of that benchmark by June.
At the same time, the share of US-origin LPG in India’s imports increased from 8 per cent in February to 16 per cent in March and 32 per cent in April, partly replacing lost Gulf supplies.
The increase in import-parity costs was also significant. CREA estimated that a standard 14.2-kg domestic LPG cylinder cost about $8.1 at import parity during March-August, compared with $6.28 under pre-war expectations. That represents an increase of about $1.8 per refill, or 29 per cent. These figures are before subsidies, taxes and distribution margins and therefore do not represent the retail price paid by households.
Clean energy cushions the shock
The CREA analysis also highlights the role of India’s and other countries’ expansion of clean power in reducing exposure to the fossil-fuel price shock.
Clean-power generation capacity added since 2020 is estimated to have saved importing countries $36 billion in coal, gas and oil imports during the first five months of the crisis. Of this, $22 billion came from avoided gas imports, $10 billion from coal and $5 billion from oil.
China recorded the largest absolute saving at $7.9 billion, followed by Japan at $4.9 billion. Spain, France, Italy, the Netherlands, Brazil and India were among the other countries with the largest savings. For India, the analysis uses national daily power-generation data from POSOCO.
Poorer economies bear a larger burden
The impact of the energy shock was uneven across economies. CREA estimated that the typical low- or lower-middle-income fossil-fuel importer paid an additional amount equivalent to 1 per cent of GDP, compared with 0.45 per cent for the typical high-income importer.
Among the 20 largest payers, Egypt faced the highest burden relative to its economy at 1.33 per cent of GDP, followed by Chile at 0.79 per cent and Thailand at 0.74 per cent. China had the highest absolute net cost at $31.7 billion, but this amounted to only 0.17 per cent of its GDP. India’s $14.4-billion net cost represented 0.38 per cent of GDP.
CREA said its estimate is conservative because it excludes several costs associated with the crisis, including pipeline gas, coal, fuel oil, naphtha, freight rates, war-risk premiums and other components that feed into consumer prices. It also measures the additional cost of fuel actually purchased and does not quantify the economic cost of fuel that consumers or businesses could no longer afford because of higher prices.
The report compared actual prices and seaborne fuel arrivals between March and August with the futures curves prevailing during February 16-27, the 12 days before the strikes. August prices and some trade volumes were partly modelled because the month had not fully settled when the analysis was completed.
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