The war premium, in rupees: How the Iran conflict could hit India’s import bill as US midterms near

For India, the cost of a war thousands of kilometres away can be measured in rupees. Every sustained increase in crude oil prices raises the amount the country must spend to keep its economy running. With the US midterm elections approaching on November 3, the energy shock also presents a political challenge for President Donald Trump.

India's crude oil import bill stood at approximately $121.8 billion in the 2025-26 financial year, with imports meeting about 88.7 per cent of its crude requirements. At an illustrative exchange rate of ₹88 to the dollar, the bill translates to roughly ₹10.7 lakh crore. At the rupee's October 15 closing rate of about ₹95.05 per dollar, the same dollar bill would be equivalent to around ₹11.6 lakh crore, illustrating how currency depreciation increases the rupee cost of imports.

The arithmetic is stark. Based on India's reported crude import volume in 2025-26, a $1-per-barrel increase sustained across the annual import volume could add roughly ₹16,000 crore to the import bill at an exchange rate of ₹88 to the dollar, assuming volumes remain unchanged.

The bill goes beyond oil

The price of crude, however, tells only part of the story. Shipping costs, insurance premiums and longer routes can make imported energy more expensive even when supplies remain available.

The Strait of Hormuz is central to this risk. A disruption to the narrow waterway could delay shipments from Gulf producers, forcing buyers to compete for alternative supplies. Shipping costs have also risen on routes carrying Russian oil to India. Reuters reported in October that Black Sea-to-India Suezmax tanker freight had climbed to $27-30 million for a one-way voyage, up from around $19 million in September, amid heightened Black Sea risks and a wider surge in tanker rates.

War-risk insurance adds another layer of expense. For shipowners, entering a high-risk area can mean paying more to insure vessels and cargoes. These additional costs can raise the overall expense of transporting crude, although the extent to which they reach Indian refiners and importers depends on shipping contracts and market conditions.

The rupee matters, too. Since crude is traded in dollars, a weaker Indian currency makes every shipment more expensive in domestic terms.

From global markets to voters

For Indian households, a prolonged increase in energy costs could eventually affect fuel prices, transport fares, cooking gas and the cost of goods moved by road. The extent of the impact would depend on how long elevated costs persist and how much is absorbed by oil companies or the government.

In the United States, the political calculation is more immediate. Higher petrol prices and renewed inflation could undermine the administration's economic message just weeks before voters choose members of Congress. The extent to which the Iran conflict affects the midterms will depend on how energy prices evolve and whether voters hold the administration responsible for the economic fallout.

The election result will depend on more than energy prices. But the war premium offers a tangible measure of the economic trade-offs confronting both countries.

For India, the question is how much more it must pay to secure energy. For Trump, it is whether voters believe the strategic gains justify the cost.