India\u2019s trade deficit narrowed slightly to $28.21 billion in May, but petroleum imports surged to $22.7 billion from $14 billion a year earlier.
\nLower crude prices and the reopening of Hormuz could substantially reduce India\u2019s import bill and ease pressure on economic growth, inflation, and the rupee.
\nIndian refiners have been diversifying supply sources through increased purchases from Russia and interest in crude from Venezuela and Brazil.<\/p>\n
The tentative U.S.-Iran deal and the expected drop in amid increasing flows from the Middle East are set to help narrow India\u2019s trade deficit, which held at relatively high levels in April and May due to the crude price shock.<\/p>\n
Higher refined petroleum products helped India\u2019s trade deficit narrow slightly to $28.21 billion in May from $28.38 billion in April, but the crude import bill nearly doubled compared to the same month last year. \u00a0<\/p>\n
India\u2019s petroleum imports jumped to $22.7 billion last month, up from $14 billion in the same month of 2025, per a report by Dolat Capital cited by Indian news outlet ANI.<\/p>\n
Going forward, a reopening of the Strait of Hormuz and softer oil prices would benefit India\u2019s trade balances by slashing its crude import bill.<\/p>\n
\u201cSofter crude prices amid easing geopolitical tensions in West Asia could lower the oil import bill and help narrow the trade deficit,\u201d Dolat Capital analysts wrote in the report.<\/p>\n
Due to the U.S.-Iran deal, \u201cmany of our problems will go away,\u201d India\u2019s Commerce Secretary Rajesh Agrawal said this week, as carried by Bloomberg.<\/p>\n
According to Global Trade Research Initiative (GTRI) founder Ajay Srivastava, \u201cThe agreement brings immediate economic relief as the conflict has exposed India\u2019s dependence on West Asia,\u201d the expert told the Economic Times.<\/p>\n
India hopes the deal will hold and the Strait of Hormuz will reopen to alleviate the recent pressures on the economy of the world\u2019s third-largest crude oil importer.<\/p>\n
Through the Middle East crisis, India has been scrambling to contain the economic and financial impact as high oil prices weighed on the Indian currency, economic growth, and public finances.<\/p>\n
India, which imports more than 85% of the oil it consumes, received about half of all its imports from the Middle East before the war. Now, state-owned and private refiners are\u00a0looking to diversify imports, including by taking in record volumes of Russian oil, and turning to Venezuela and Brazil for additional crude to offset the lost Middle Eastern supply.<\/p>\n