US-India Trade Deal and Energy Security Amid Strait of Hormuz Crisis
US Deputy Secretary of State Christopher Landau, speaking at the Raisina Dialogue in New Delhi on March 5, 2026, stated that the US-India bilateral trade agreement is "almost at the finish line."
Landau indicated that the US is willing to help India secure energy supplies as a long-term alternative source, as the Strait of Hormuz — through which roughly 20% of global oil and gas supplies pass — faces severe disruption following the US-Israeli strikes on Iran.
Reports emerged that India is in talks to secure US naval escorts for its energy cargo vessels transiting the Middle East, a significant departure from India's traditional aversion to military dependencies.
India, the world's third-largest oil importer, relies on the Middle East for approximately 40% of its oil imports and 85-90% of its LPG imports, making the Hormuz disruption an acute energy security crisis.
India-US Bilateral Trade Architecture
India and the United States are each other's largest trading partners. Bilateral goods and services trade reached approximately $131.8 billion in 2024-25. A February 2025 joint statement between President Trump and Prime Minister Modi set an ambitious target of more than doubling bilateral trade to $500 billion by 2030 and committed to negotiating a multi-sector Bilateral Trade Agreement (BTA).
The Strait of Hormuz crisis has created a window for accelerating trade deal negotiations — India needs US energy supply diversification, and the US is using that leverage to push for faster conclusion of the BTA.
Strait of Hormuz: Strategic Chokepoint and Energy Security
The Strait of Hormuz is a narrow waterway between Iran and the Sultanate of Oman, connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. At its narrowest point, the strait is only about 33 km wide, yet it carries approximately 20-21 million barrels of oil per day — roughly 20% of global oil consumption — along with significant volumes of LNG and other petroleum products.
The US offer to provide energy supply alternatives and potentially naval escorts represents a direct response to India's Hormuz vulnerability, transforming an energy security crisis into a diplomatic opportunity for deepening bilateral ties.
India's Energy Diversification Strategy
India's long-term energy strategy, encapsulated in documents like the National Energy Policy and the Integrated Energy Policy, aims to diversify both fuel types and sourcing geographies. On fuel diversification, India targets 500 GW of non-fossil electricity capacity by 2030 under its updated Nationally Determined Contributions (NDCs) to the Paris Agreement.
The US offer to serve as an "alternate energy source" aligns with India's diversification goals but introduces new dependencies and requires significant infrastructure investment in US-origin LNG import capacity.
- Bilateral India-US trade target: $500 billion by 2030 (set in February 2025 joint statement)
- Strait of Hormuz: approximately 20% of global oil supplies and approximately 25% of global LNG trade pass through it daily
- India's crude oil import dependence: approximately 85% of total consumption
- India's oil import from Middle East: approximately 40% of total imports
- US became India's top oil supplier in 2023 for some months as Russia-sourced purchases complicated trade deal negotiations
- India sought US naval cover for Gulf energy shipments — reported in multiple sources during the March 2026 Hormuz crisis
- Raisina Dialogue: India's premier geopolitics conference, organised by Observer Research Foundation (ORF) and the Ministry of External Affairs
- Container freight rates on Asia-West Asia routes surged approximately 200-300% during the Hormuz crisis