India's Fossil Fuel Import Bill Jumps $22.5 Billion

India paid an additional $22.5 billion for fossil-fuel imports between March and August 2026 due to the Hormuz crisis, which drove global oil and gas prices higher. According to a report by the Centre for Research on Energy and Clean Air (CREA), India was the second-most affected importing country after China, which incurred an additional $35.5 billion.

The US recorded an extra import cost of $16.5 billion, followed by the Netherlands at $13.5 billion, South Korea at $13.2 billion, Italy at $12.7 billion, and Japan at $12 billion. The six-month disruption has increased global fossil-fuel import bills by more than $330 billion, equivalent to roughly $55 billion every month.

CREA described the shock as the most prolonged fossil-fuel price surge since the 1990 Gulf War. Crude oil accounted for the largest portion of the additional cost, at $164 billion, with prices averaging 35% above pre-crisis expectations. Diesel and gasoil prices were 59% higher, adding $74 billion, while gasoline prices rose 43%, increasing costs by another $36 billion.

The impact has been particularly severe for lower-income countries. Low- and lower-middle-income economies paid an additional amount equivalent to 1% of their 2024 GDP because of higher fossil-fuel prices, compared with 0.45% for high-income nations. CREA noted that 134 of the 170 countries examined paid more for diesel than pre-crisis futures had indicated.

However, clean-energy investments have provided some relief. Renewable capacity added since 2020 helped importing countries avoid an estimated $36 billion in fossil-fuel imports during the first five months of the crisis, including $10.6 billion in avoided wartime price premiums.

India's crude oil import bill jumped 57% to $63.4 billion in April-July FY27, despite flat volumes. The surge in oil and gas prices has driven global costs higher, affecting economies worldwide. The crisis has highlighted the need for diversification of energy sources and the importance of investing in clean energy.

The prolonged fossil-fuel price surge has significant implications for India and the global economy. As the world's third-largest oil consumer, India is vulnerable to fluctuations in global oil prices. The increase in fossil-fuel import bills will likely have a ripple effect on the economy, impacting inflation, growth, and trade balances.

In conclusion, the Hormuz crisis has led to a significant increase in India's fossil fuel import bill, with far-reaching implications for the economy. The need for clean energy investments and diversification of energy sources has never been more pressing.