India could face renewed pressure on fuel prices after the United States allowed a sanctions waiver on Russian seaborne crude oil to expire on May 17, tightening the country’s energy options at a time when global crude prices are already surging due to instability in the Middle East. The move comes amid ongoing disruption around the Strait of Hormuz, a key global oil transit route, where tanker movement and shipping costs have been affected by the Iran conflict.

For nearly two years, discounted Russian crude helped India cushion the impact of volatile global energy markets after Western nations imposed sanctions on Moscow following the Ukraine war. India sharply increased imports of Russian oil during that period because of lower prices and attractive refining margins. According to market data, Russian crude at times accounted for nearly half of India’s total oil imports, helping contain inflation and reduce pressure on domestic fuel prices.

The expiry of the US waiver now raises concerns for Indian refiners, who may face higher financial and compliance risks while purchasing Russian cargoes. At the same time, sourcing more oil from traditional Middle Eastern suppliers could become more expensive due to rising geopolitical tensions in the Gulf region. Global crude prices have already climbed above $105 per barrel, significantly increasing India’s potential import bill.

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India imports more than 85 per cent of its crude oil requirements, making the economy highly sensitive to prolonged increases in energy prices. Analysts warn that sustained high oil prices could eventually impact petrol and diesel rates, LPG cylinder prices, transport costs, airfares and food inflation. The recent increase of around Rs 3 in domestic fuel prices has already added pressure on businesses and consumers dealing with broader inflation concerns.

The government is now expected to balance multiple competing priorities. It could absorb part of the burden through tax cuts or subsidies, ask state-run oil companies to bear temporary losses, or allow retail fuel prices to rise further. Each option carries economic or political costs. Energy experts have also suggested that prolonged supply disruptions could eventually revive fuel-saving measures seen during previous crises, including reduced travel and staggered work schedules.

Commenting on the impact of rising fuel prices, Rishabh Jain said exporters and manufacturers were already struggling with higher freight costs and uncertainty in global trade routes. He noted that several companies were slowing production and relying on existing inventory to manage costs, while weaker firms were finding it increasingly difficult to sustain operations amid mounting economic pressure.

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