<h2>Overview</h2> <p>India’s energy imports are increasingly vulnerable to geopolitical flash‑points. The latest <span class="key-term" data-definition="Strait of Hormuz — a narrow waterway between Oman and Iran through which about 20% of global oil passes; any disruption directly affects world oil prices and is a key concern for GS3: Economy">Strait of Hormuz</span> crisis, triggered by the US‑Israel war on Iran, has added to a series of oil shocks that have historically strained India’s balance of payments and growth.</p> <h3>Key developments (April 2026)</h3> <ul> <li>US forces have imposed a <span class="key-term" data-definition="US blockade — a naval and economic restriction aimed at limiting a country's trade, often used as a coercive tool in international relations (GS2: Polity)">blockade</span> on Iranian ports and ships in the Strait of Hormuz for four consecutive days, tightening global oil supplies.</li> <li>Iran’s deputy foreign minister rejected any temporary cease‑fire, demanding a comprehensive end to regional hostilities.</li> <li>Oil prices fell modestly on 16 April after the White House signalled possible de‑escalation, but volatility remains high.</li> <li>Washington extended a one‑month sanctions waiver for Russian crude to India until 16 May, allowing continued imports at discounted rates.</li> </ul> <h3>Historical oil crises and India’s experience</h3> <p><strong>1990 Gulf War (Operation Desert Storm)</strong>: Iraq’s invasion of Kuwait led to a <span class="key-term" data-definition="Operation Desert Storm — the US‑led military operation in 1991 to expel Iraqi forces from Kuwait (GS2: Polity)">US‑led coalition</span> response. Oil prices doubled, pushing India’s foreign‑exchange reserves to $1‑1.2 billion and prompting a gold pledge of 67 tonnes (≈$600 million) to raise emergency funds.</p> <p><strong>2008 Financial Crisis</strong>: A collapse of the US housing market caused oil prices to swing from $100 to $147 per barrel in July, then plunge to $30 by year‑end. India’s inflation spiked to 12.9 % (Aug 2008), GDP growth fell from 9.4 % to 6.7 % (2008‑09), and the fiscal deficit rose to 6.2 % of GDP. The government raised fuel prices and issued oil bonds worth ₹94,600 crore to offset under‑recoveries.</p> <p><strong>Russia‑Ukraine War (2022‑present)</strong>: Western sanctions capped Russian crude at $60 per barrel, but India bought discounted Russian oil, boosting imports. A US‑issued waiver (extended to 16 May 2026) further eases supply constraints.</p> <h3>Impact on India’s economy</h3> <p>Each shock translated into higher <span class="key-term" data-definition="Balance of Payments (BoP) — a record of all economic transactions between a country and the rest of the world; a deficit signals external vulnerability (GS3: Economy)">Balance of Payments</span> pressure, rising import bills, and slower growth. The current Strait of Hormuz tension is projected to push India’s real GDP growth below the critical 7 % threshold for F