The India-Oman Comprehensive Economic Partnership Agreement (CEPA), which entered into force on Monday, eliminates tariffs on most Indian exports to Oman, covering about 99% of the value of India’s shipments to the Gulf state. The agreement comes at a time when India is seeking to safeguard critical supply chains amid ongoing turmoil in the Middle East following U.S.-Israeli attacks on Iran on Feb. 28.

Indian officials and trade experts say the pact assumes added significance as the closure of the Strait of Hormuz threatens one of the world’s most important energy and shipping routes. Despite efforts to diversify sourcing and transport networks, India remains dependent on the corridor for roughly 30% of its crude oil imports and about 90% of its liquefied petroleum gas imports.

In a statement, India’s Ministry of Commerce and Industry said Oman’s ports of Sohar, Duqm and Salalah would provide Indian exporters with enhanced access to Gulf and East African markets, helping establish what it described as a new trade gateway for Indian businesses.

Anil Wadhwa, a former Indian ambassador to Oman and a distinguished fellow at the Vivekananda International Foundation, said the agreement had acquired immediate strategic relevance because of the regional crisis.

“The coming into force of the CEPA between India and Oman has immediately gained significance due to the crisis in the Middle East and the closure of the Strait of Hormuz,” Wadhwa said, adding that the pact offered India alternative logistics channels, transshipment facilities and stronger commercial linkages at a time of growing uncertainty in global supply chains.

He said the agreement would not fully shield India from the broader economic consequences of a prolonged regional conflict but could help mitigate disruptions by preserving access to key trade corridors.

The CEPA is India’s second bilateral trade agreement with a member of the Gulf Cooperation Council after a similar pact with the United Arab Emirates signed in 2022. For Oman, the deal is its second bilateral free trade agreement after its accord with the United States in 2006.

Oman is India’s second-largest trading partner in the Gulf region, with bilateral trade exceeding $11 billion in the 2025-26 fiscal year.

Industry groups view the agreement as a mechanism to strengthen India’s manufacturing exports while reducing logistical dependence on routes affected by the Hormuz crisis.

Manish Mohan, senior director at the Confederation of Indian Industry, said the prolonged disruption of shipping through the strait had heightened concerns over fuel imports, fertilizer supplies and freight costs.

India, the world’s second-largest fertilizer consumer after China, uses more than 60 million tonnes of fertilizer annually. The conflict involving Iran has affected fertilizer supply chains, with Gulf producers accounting for about one-third of India’s imports of urea and phosphate-based fertilizers.

Mohan said Oman’s location outside the Strait of Hormuz increased its value as a commercial hub and alternative entry point for Indian imports if regional instability persists.

The agreement is also expected to support investment flows and deepen economic ties between the two countries, while providing Indian exporters with improved access to markets across the Gulf and eastern Africa through Omani ports and logistics infrastructure.

The tanker was attacked off the UAE’s Al Jeer Port on May 4, according to the report, which cited people familiar with the incident. The vessel’s deck caught fire during the attack and bore markings reading “CHINA OWNER & CREW,” Caixin said.

No casualties or details regarding the extent of the damage were immediately disclosed.A person familiar with the shipowner told Caixin the incident represented the first known attack involving a Chinese oil tanker in the region, describing the event as “psychologically very hard to accept.”The strike comes amid mounting security risks around the Strait of Hormuz, a strategic maritime chokepoint through which a significant share of global oil and fuel shipments passes daily.

Shipping activity across the Gulf region has faced heightened disruption since the outbreak of hostilities involving Iran, the United States and Israel earlier this year. Regional tensions have raised concerns among energy traders, insurers and shipping operators over vessel safety and supply-chain stability.

The reported attack follows a series of incidents affecting commercial shipping near Hormuz, including claims and denials involving vessels linked to South Korea and other Asian economies heavily dependent on Gulf energy supplies.China, the world’s largest crude oil importer, relies heavily on Middle Eastern energy exports transported through the Strait of Hormuz.

Beijing has repeatedly called for stability in the Gulf and urged all parties to avoid actions that could threaten international trade routes.Neither Chinese authorities nor UAE officials immediately issued public statements regarding the reported attack.

International crude prices have climbed above $100 per barrel following disruptions around the Strait of Hormuz, a critical route that accounts for about 40% of India’s crude imports, after military strikes by the United States and Israel on Iran late last month.

Oil Minister Hardeep Singh Puri said the government had absorbed a significant fiscal burden to offset losses incurred by oil marketing companies, estimating under-recoveries of about 24 rupees per litre on petrol and 30 rupees per litre on diesel at current global prices.

Economist Madhavi Arora of Emkay Global estimated the annualised fiscal impact of the duty cuts at around 1.55 trillion rupees, noting that the measures would cover roughly 30% to 40% of annual losses faced by fuel retailers.India’s benchmark 10-year government bond yield rose 7 basis points to 6.95%, its highest level in 20 months, reflecting concerns over increased borrowing and fiscal strain

.Shares of state-run refiners, including Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited, rose more than 4% at the open before trimming gains later in the session.

Although India formally deregulated fuel pricing, state-owned oil marketing companies which dominate about 90% of the retail market often delay passing on higher crude costs to consumers during periods of volatility.

The latest measures highlight the government’s reliance on tax adjustments and export levies to manage domestic fuel prices and inflationary pressures during global energy shocks.

Rather than being seen as a political gamble, India’s diversified energy policy reflects a calculated effort to ensure affordability, sustainability, and balance in an uncertain global environment.

As global oil politics grow increasingly complex, India’s balanced approach to energy sourcing showcases both economic pragmatism and global responsibility — positioning the nation as a key player in maintaining stability in volatile markets.

The issue gained global attention after recent trade tensions between the United States and India over energy imports. Yet, India’s policy remains guided by one core principle — protecting domestic consumers while supporting the country’s rapid economic growth.

Officials have consistently stated that energy decisions are based on the best interests of the Indian economy, not external pressures.

India, the world’s third-largest importer of oil, spent over $52 billion on Russian crude last year, accounting for roughly 37% of its total oil imports. This surge was primarily driven by competitive pricing and favorable supply terms.

By purchasing discounted oil, India has been able to stabilize domestic fuel prices, curb inflation, and support its industrial growth, while maintaining a steady supply of energy to meet rising demand.

Energy analysts emphasize that this strategy is neither political nor opportunistic — it’s pragmatic. “Buying discounted oil benefits not just India but the global market by preventing excessive price volatility,” says Partha Mukhopadhyay from the Centre for Policy Research in New Delhi. The logic is simple: if India were to stop purchasing Russian oil, prices could spike globally, affecting both emerging and developed economies.

The savings from discounted oil — estimated at around $9 billion annually — have helped India maintain fiscal discipline and reinvest in renewable energy infrastructure.

Simultaneously, the country continues to strengthen ties with the Gulf nations, the U.S., and African suppliers, ensuring no single dependency dictates its energy future.

India’s energy diversification strategy is built on resilience. Before 2022, its imports were primarily sourced from the Middle East — Iraq, Saudi Arabia, and the UAE.

However, sanctions on Iran and Venezuela forced India to diversify, adding new suppliers such as the U.S., Brazil, and Russia. This adaptability reflects a long-term strategy to balance cost-efficiency with security of supply.

Moreover, India’s vast refining capacity — among the world’s largest — allows it to process a wide variety of crude grades. Many of these refineries are calibrated for medium-to-heavy crude, similar to Russia’s Urals blend.

Replacing these supplies with lighter U.S. shale oil would require significant technical adjustments and increased costs. Hence, the current mix offers operational stability and price consistency.

For global markets, India’s continued participation as a responsible buyer helps moderate demand shocks. As Ajay Srivastava of the Global Trade Research Initiative explains, “India’s role in global energy trade is crucial — it ensures liquidity, keeps prices in check, and supports global economic balance.”

Looking ahead, India remains committed to reducing its carbon footprint while gradually increasing its investment in renewable energy, biofuels, and hydrogen technology. Yet, policymakers recognize that the path to a green transition must remain economically sustainable.

In essence, India’s current energy policy is a model of balanced diplomacy — prioritizing affordability, supply security, and global cooperation.

By keeping consumer interests at the forefront while maintaining open dialogue with both the U.S. and Russia, India continues to demonstrate that responsible pragmatism can coexist with international partnership.