Following the U.S.–Iran ceasefire and partial reopening of the Strait of Hormuz, energy flows may resume but uncertainty persists. Natural gas shortages will continue to disrupt fertiliser production and fuel inflation world-wide. And, as Robin Mills, CEO of Qamar Energy and Amit Bhandari, Senior Fellow on Energy, Investments and Connectivity, Gateway House, tell Lara Farrar, Council on Foreign Relations International Affairs fellow at Gateway House. Iran will retain leverage and go on influencing prices and supply chains.
Q. Lara Farrar (LF):
Robin, since you’re joining us here from Dubai, what is your sense of the situation and what it will take to get oil flows, energy flows going back through the Strait of Hormuz?
A. Robin Mills (RM): The U.S. could stop the war at any point and can stop the attacks and go home.
But that doesn’t mean that the conflict ends, and it doesn’t mean that normal transit through the Strait of Hormuz is restored because Iran, of course, is the one making that decision right now. If Iran is not compelled to allow transit by military force, by escorted convoys, it can continue to keep the Strait closed, pretty much close to 90%- 95% closed indefinitely.
One of Iran’s objectives in this is to make this whole episode very painful for the U.S. so that it’s not repeated. Iran does not want to be in the state that it was in June last year where there was a short war.
Iran is damaged. There’s a ceasefire. But none of the underlying issues are solved.
Secondly, to maintain some ongoing control, a few ships are being allowed to pass and paying some kind of a toll.
Part of the Iranian objective is to formalise that and indeed have that kind of control over vessels that have to get approval. The money is not insignificant. If you look at the number of ships coming and going out of the Gulf and the reported amounts of money paid, just the oil tankers alone, you can be talking $5-6 billion a year, which is pretty substantial for Iran, to put into rebuilding its military forces and therefore strengthen its ability to control the Gulf and so on.
But also the political element. We’ve seen Iran do deals to get out ships under individual political deals, whether that is with India, Pakistan, Thailand or with China. These ships are allowed out under a deal and an agreement, and Iran is using that leverage pretty deliberately. That’s a pretty worrying and uncomfortable situationfor the Gulf countries, who are obviously dependent on this on the strait for all of their oil exports and plus other commodities going out and coming in. But also for other countries who are dependent on that. Imagine that India or Bangladesh or Japan or South Korea really wants to have to do a deal with Tehran every time they need to get something. So that strikes me as an Iranian objective, and it may well be one that’s achieved for a period of years, even months, let’s say, or even years, a year or two, but not one that’s very stable either and still sets up a longer phase of uncertainty, insecurity and higher energy costs.
Q. (LF): Does that mean that a lot of countries will have to start figuring out different logistics routes in terms of procuring energy, different supply lines? Does this shift energy flows to any degree, particularly for the countries that have been impacted kind of east of the Suez Canal? Are we seeing the beginning of a shift in supply chains at all?
A. (RM): At some point, a large part of that normal transit will resume because of the political pressure on Iran. Iran needs to balance how it uses this leverage in a kind of a post-war scenario. But yes, it’ll be probably still a restriction of flows out of the Gulf. But even if flows return to normal, let’s say, pre-war levels, there’ll always be that uncertainty, that risk, and that will mean that countries will diversify their supply routes. They will look for routes to get supplies in and out of the Gulf. Don’t go through the strait, bypass pipelines. The obvious ones, maybe rail, maybe road in different directions. And they will look to develop oil and gas suppliers and customers that are not on the strait, and there’s a wide variety of those in the Americas, particularly in Africa. All of those places are going to see greater attention, greater investment.
(LF): Some of the EU leadership encouraging the rationing of fuel. What will be the impact for the EU in terms of diversification of energy and how they’ll sort of cope with this moving forward?
(RM): In the short term, the EU’s options are limited on oil and gas, and they already activated what they could in 2022 in the Russia-Ukraine crisis, and , it almost eliminated their dependence on Russia and Russian gas. They’ve phased out the use of Russian oil. But in terms of other suppliers, they go to the usual suspects. They go to Norway and Algeria and Libya and so on. There’s not really much more to come. Otherwise, practically, they get more dependence on the US. Longer term there will be a new impetus in the EU for getting off reliance on oil and gas entirely. So further increasing renewables, electric vehicles. That was already done extensively after 2022, but there’ll be even more of a push for that.
Q. (LF): Amit, can you talk just a little bit about what’s been going on with India? How this has led to some issues with fuel access here, where India is doing OK. India is coming out in terms of just having the infrastructure to cope with this, but also some of the weak points where the government might need to think more about supply issues in the future, should something like this happen again.
A. Amit Bhandari (AB): I will look at two fuels first, the first is liquid, which is petroleum, and second is LNG or natural gas. In case of LNG, imports have been hurt substantially because Qatar is one of the big suppliers. And the result has been that a lot of industries which rely on natural gas as a fuel have had to shut down. This includes certain tile manufacturers in Gujarat, for example. Luckily for India, natural gas is possibly 6%- 7% of our energy mix, which is, I think, the lowest amongst all the large economies.
Most of our electricity comes from coal. To that extent, India will be less affected by what has happened in the natural gas market compared to practically all the larger economies.
In case of liquid petroleum fuels, there was an initial shock of the supply stopping out of Hormuz, and since then, India has started purchasing more oil from Russia, as it was doing in the past. There is a sufficient commercial buffer within the country to have offset that changed supply sources. By and large, India has a surplus of petroleum refining capacity, which means that we produce sufficient diesel, petrol, aviation fuel for our own needs and we export some.
We will not be running out of any of these fuels anytime soon. There has been about, I think, a 10% loss of global oil supply. So as long as we are able to buy the crude, which we are, we won’t run short of these fuels. The one finished product that we do import is liquefied petroleum gas, which is butane that you use in cylinders for cooking, and there we rely on imports for almost, I think, 60% out of our requirements.That is the one place where we have run short. So industrial and commercial use of LPG or butane has pretty much stopped and supply has been prioritised for households. So the primary pain point for India in case of oil is really the price.
What was 65-$-70 earlier is now about $100, and we are paying an extra $5 billion dollars a month. In case of natural gas, industrial supply has been shut down, and if the shortage persists, we will have a problem on food inflation maybe two or three months down the line because natural gas is an input for urea manufacture. Other than that, we are doing as well as we could under the circumstances.
(LF): You brought up Russia, the energy sector has been progressively sanctioned since 2014. Do either one of you want to comment on what this means for Russian oil and gas flows at all?
(RM): There’s been obvious attempts by the U.S. to kind of free up those Russian oil and gas. Let’s say not gas to be honest, but oil certainly anyway, they unsanctioned oil on water that was in transit. They go through some big numbers, 130 million barrels of Russian oil in transit. Probably about 30 million of oil that was genuinely kind of looking for a buyer. They did the same with the Iranian oil. It’s kind of remarkable, that the result of this war was so far to relax sanctions, not just on Russia, but on Iran too, and the objective therewas to ensure that China just didn’t simply buy up this oil at a discount, but that other countries had a chance to buy it, including India, of course. And we’ve seen the first arrival of fuel from Iran to India for several years now because this relaxation of those sanctions. The U.S., despite what they said, they didn’t condition those payments.
So Iran should actually have access to those payments. It wasn’t as previously being locked away in some escrow account. That was a change. It’s a testament to how hasty and poorly thought through this sanction reversal was. But from the Russian point of view, means higher prices for Russia, not a higher base price and a lower discount. Not as good for India in that regard, in the sense that India doesn’t have access to the same discounted Russian oil.
In fact, if anything, the Russian oil is possibly trading at a slight premium now, Now that other countries, not just China, but others as well, can buy it. The Russian oil exports are constrained by the Ukrainian attacks on their facilities, which have been pretty successful and quite damaging recently. So I’m not sure that we can see a lot of new Russian oil suddenly appearing on the market. If anything, the Russians are kind of also struggling to keep up their exports.
(LF): Obviously, there are some alternative supply routes, pipelines to get oil out of the region. They have a certain capacity and then maybe a little bit more of an excess capacity above that. Do you have a sense of is that infrastructure, how it’s being used currently? Is it at full blast? Can it take some more capacity to try to ease some of the disruption from the Strait of Hormuz right now? Any other additional infrastructure that could be brought online to transport oil through alternative routes?
(RM): So pre-war Strait of Hormuz was carrying about 20.5 million barrels per day of oil. About 15 million of crude and the rest in refined products, about one and a half million of that being LPG, liquefied petroleum gas. From the bypass pipelines, we’re really talking about 15 million of crude. About 1.7 million of that could go through Fujairah in the UAE pipeline to there. That was being used pre-war already. So the extra amount is perhaps 1.7 million, and then the Saudi East West pipeline, which runs to Yanbu on the Red Sea, that has capacity of 7 million barrels per day. Some of that’s then used domestically. So about 5 million of exports. And from what we’ve seen in recent days, that has been used out of capacity. So indeed, that port is operating at around 5 million barrels per day of exports.
Now, will the Saudis or the UAE manage to get any more out, manage to de-bottleneck, improve operations at the ports? Yes, probably. I’d expect maybe they squeeze a little bit more out. But I don’t think we’re expecting huge new amounts out of either of those routes, and in fact, the Fujairah route has been attacked by the Iranians several times and damaged in places along the pipeline and the port. So if anything, that 1.7 maybe of capacity may be less in actual use, and that’s it really. Yeah, there are some routes through Iraq that maybe a few hundred thousand barrels per day, but not enough to really change the game. So anything else is going to take time.
Regarding any major de-bottlenecking, new routes – we’re talking two to three years, realistically, in a kind of emergency situation. Post-war, all these countries, the UAE, Saudi and some of the others that are completely stuck, like Kuwait, will try to develop alternative routes. They’ll probably do so quite urgently, but still, that’s a two or three year job.
(LF): Was it short-sighted that these routes haven’t been thought about and developed before? The Strait of Hormuz is so important.
Is this something that is maybe we’re going to catch up with really quickly?
(RM): The Saudi east-west line was built in the 80s and it was during the tanker war between Iran and Iraq at that point. There was a need at that point, and then it kind of lay idle for three decades. It was used a bit for domestic exports, but not really for domestic use, but not really for exports, and the UAE line is more recent. It was built in 2011. So you could say those were kind of far-sighted because nobody really expected the Strait to be closed. It was always out there as a worst case, but unlikely scenario, and people, I think, expected if the Strait was closed, then the US Navy would reopen it within a few weeks. They were thinking in the kind of scenario of the Iranians would attack with small boats. They would have mines. It would be a kind of conventional kind of closure, and it would take a few weeks of action to reopen it, and for a few weeks, the pipeline is not really justified. So I think it’s lucky indeed that they at least built the two that they did. But as we’ve seen, the scenario for closing the Strait now is different.
It relies on missiles, drones, and especially on the drone threat, which is very hard for the US to counter in any kind of conventional way. Now, would it have been better if those pipelines were built to carry more? Would it be better if they had connected up Kuwait and Qatar so those countries could export too? in retrospect, yes. But it just seems like it’s such an unlikely scenario that there was never the impetus to do more. I mean, the UAE actually was building a second pipeline starting in 2014. So it would carry more of its exports, and at some point that will come into action as well. But again, not really in time for this current conflict.
Q. (LF): Amit, back to the pipeline discussion, pivoting more to India. Do you think this is going to reinvigorate a discussion about whether India should be involved with some type of pipeline project to have more security with oil?
A. (AB): There are three serious proposals for pipelines from West Asia to India. All of these are for natural gas, because oil is better transported on ships. The first is the TAPI pipeline, which is the Turkmenistan-Afghanistan-Pakistan-India pipeline, and the second project was Iran-Pakistan-India IPI. The thing is, both of these pipelines pass through Pakistan. They were talked up in the mid-2000s, but given the underlying risk of putting a critical infrastructure through Pakistan, these pipelines are really unlikely to ever come up. So I don’t think IPI or TAPI have any future. The third pipeline which was proposed was an Oman or Iran-Oman-to-India pipeline, which goes subsea, via the sea route.
So this is, again, the project has been proposed for a while. But given that gas does flow in the form of LNG quite freely, it is not as crucial as it used to be 20 or 30 years ago. If we go back to the early 2000s, LNG market was a very shallow market, very few operators. You had to get long-term contracts. So the pipelines made more sense at that time, and given that Iran is going to be the supplier for the gas, it’s unlikely that many contractors will want to work there. So we would have to continue relying on ships, really.
Q. (LF): How does Iran fit in in the future with global oil trade and rebuilding infrastructure in the region? What could this look like going forward? You mentioned that Iran may have a significant influence over the Strait of Hormuz, especially if the United States just abandons trying to find a way to open it back up and keep it safe and take authority away from Iran. Will the country sort of fold back into operating with other Gulf states? How do you see this taking shape, potentially?
A. (RM): Yeah, a lot of imponderables there. That depends on settlement and if there is indeed a settlement or just a kind of a stalemate and the shape of Iranian post-war government and so on. I think the sanctions regime on Iran, on Iranian oil is broken down. It will be very tough for the US to reinstate it. So that means that more countries, including India and others, potentially have access to Iranian oil, not just China. I think there will continue to be issues about how that’s paid for and countries will have to find routes that don’t depend on the US dollar. But, they can find such routes, alternative banking routes and barter trade and so on. But I think that the prohibition of Iranian oil going to other countries is going to break down if it hasn’t already. I think Iran, they want money to rebuild. Obviously, they’ll get that from their oil earnings and Iranian oil, of course, continues to flow at rates, at least of the rates pre-war, possibly even more, and, of course, at much higher prices. So a lot of money coming into Iran.
Now that will also be used on, of course, on sustaining their war efforts and building up the military and so on. But again, in a post-war scenario, there will be some effort to rebuild domestically as well. They’ll also be having money for these tolls, a significant amount. And they’ve talked about reparations and looking for investment into the country from the Gulf states. That’s going to be difficult. I don’t think anyone’s seriously going to pay them reparations. The demands go the other way as well. The Gulf is saying, no, you pay us reparations, and in terms of investment into the country.
Look, Iran was always a very difficult place to invest in, never mind sanctions. It was just a very difficult investment environment. Very opaque, a lot of vested interests, a lot of corruption, a lot of companies linked to Revolutionary Guards, which either you couldn’t deal with because of sanctions or that they were determined to protect their own turf and basically keep people out, whether in the energy sector or other sectors. So under anything like the current government, I don’t expect like a Russian investment into Iran. Of course, people will try. But I think practically even China found it was just a very tough place to invest seriously. You can speculate about very different governments that may be more open. Maybe that will come. But the current line is a pretty hard line. A Revolutionary Guard-dominated ideological regime, which is not going to be very open to international investment, and in that sense, it’s a pretty different outcome from the Venezuela case, which I think the U.S. was hoping to replicate.
(LF): Thank you all so much. We really hope to continue this conversation as this conflict continues, at least for another couple of weeks, and certainly it will be long term ramifications if it does indeed wind down, as President Trump suggested.
Robin Mills is the CEO of Qamar Energy, and non-resident fellow at the Arab Gulf States Institute, Washington D.C.
Amit Bhandari is the Senior Fellow for Energy, Investment and Connectivity at Gateway House.
Lara Farrar is the Council on Foreign Relations, International Affairs Fellow at Gateway House.
This podcast was exclusively recorded for Gateway House: Indian Council on Global Relations. You can explore more exclusive content here.
Support our work here.
For permission to republish, please contact outreach@gatewayhouse.in
©Copyright 2026 Gateway House: Indian Council on Global Relations. All rights reserved. Any unauthorised copying or reproduction is strictly prohibited.