From Oman to Tanzania: How the Iran war is redrawing India’s trade map

The 2026 Iran war and the closure of the Strait of Hormuz — the chokepoint through which approximately 20% of global petroleum liquids and a large share of I...

What Happened

The 2026 Iran war and the closure of the Strait of Hormuz — the chokepoint through which approximately 20% of global petroleum liquids and a large share of India's West Asia-bound trade passes — forced a rapid, structural realignment of India's import and export trade flows.
On the import side, Oman emerged as a critical energy hub for India, with Indian imports from Oman surging by over 246% year-on-year driven by crude oil, LNG, and fertilisers; Russia and the United States consolidated their positions as top-two crude suppliers as India rerouted away from conflict-exposed Gulf sources.
On the export side, traditional Middle East destinations — Iran, Iraq, Qatar, Saudi Arabia — became largely inaccessible due to shipping insurance unavailability, port disruptions, and payment channel blockages, driving Indian exporters to redirect shipments toward South-East Asia (Singapore) and Sub-Saharan Africa (Tanzania, South Africa).
The disruption exposed deep structural vulnerabilities: approximately 400,000 tonnes of Indian basmati rice were stranded at ports; the Indian Rice Exporters Federation advised members to halt all fresh Gulf-bound shipments; auto-sector exports to the Middle East were delayed by months.
With the signing of the US-Iran MOU imminent, trade flows are expected to begin a gradual normalisation — but freight costs, insurance premiums, and supply chain recalibrations may take months to fully unwind, and some of the new trade partnerships forged during the crisis are expected to endure.

Static Topic Bridges

The Strait of Hormuz as India's Trade Chokepoint — Geography and Vulnerability

The Strait of Hormuz's geography makes it the single most consequential maritime chokepoint for Indian trade, both as an entry point for energy imports and as a transit corridor for exports to West Asia, North Africa, and beyond.

Location: between the Musandam Peninsula (Oman/UAE) and southern Iran; minimum navigable width ~33 km with two 2-km shipping lanes
Approximately 15–17 million barrels per day (mb/d) of crude oil and petroleum products transit Hormuz — representing ~20–27% of global seaborne petroleum trade
India's crude oil imports routed through Hormuz: approximately 30% of total crude imports (the majority now transit via the Suez Canal or Cape of Good Hope; UAE's Habshan-Fujairah pipeline bypasses Hormuz for some volumes)
India's exports to the Gulf region: approximately $50+ billion annually (including rice, textiles, pharmaceuticals, auto parts, engineering goods)
The Hormuz closure in 2026 was accompanied by mining of shipping lanes, requiring dedicated mine-clearing operations before commercial traffic could resume safely

Connection to this news: India's geographic position — as both a major energy importer dependent on Gulf supplies and a major exporter to Gulf markets — means that any prolonged Hormuz disruption simultaneously compresses India's import supply chains and export revenue streams, amplifying the economic shock.

India-Oman Strategic Partnership — From Corridor to Anchor

Oman's emergence as India's critical energy corridor during the 2026 conflict reflects both geographic advantage and a deepening bilateral partnership formalised through the India-Oman Comprehensive Economic Partnership Agreement (CEPA).

India-Oman CEPA: signed December 18, 2025; entered into force June 1, 2026 — covering trade in goods and services, investment, and regulatory cooperation
Under the CEPA, India secures duty-free market access in Oman across 98% of tariff lines; India offers tariff liberalisation on ~78% of tariff lines for Oman imports
Bilateral trade (FY 2025–26): $11.18 billion (up 5.41% year-on-year)
India's imports from Oman surged by ~246% in the early months of the 2026 crisis — dominated by crude oil ($1.6 billion), LNG ($1.2 billion), and fertilisers ($843 million); petroleum gas imports from Oman nearly doubled to $1.4 billion
Oman became India's largest LNG supplier during the disruption period, replacing Qatar's disrupted shipments
Oman's strategic advantage: the Strait of Hormuz passes through Oman's Exclusive Economic Zone; Oman maintained relative neutrality in the conflict and kept its ports (particularly Sohar and Salalah) operational throughout

Connection to this news: Oman's role as India's energy anchor during the Hormuz crisis validates the strategic rationale for the CEPA signed just months before the conflict. Salalah port's position outside the Strait — on the Arabian Sea — made it a viable transshipment hub for rerouted India-bound energy cargoes.

India's Import Diversification — Russia and the US as Energy Sources

The 2022 Russia-Ukraine war had already accelerated India's shift toward Russian crude imports, a trend the 2026 Hormuz disruption reinforced while also elevating the United States as a significant supplier.

Russia became India's largest single crude oil supplier following the 2022 price cap imposed by G7 nations, offering steep discounts to Indian refiners; by FY 2025–26, Russian crude accounted for approximately 35% of India's crude imports
India-Russia energy trade is conducted through alternative payment mechanisms (Indian Rupee, UAE Dirham, Chinese Yuan) given US dollar-clearing restrictions under sanctions
US crude oil imports to India: expanded significantly in 2025–26 as part of India's bilateral trade commitments under the India-US trade framework; the US sought to reduce India's Russian crude dependency as a foreign policy objective
The Cape of Good Hope rerouting (bypassing both Suez Canal and Hormuz) added approximately 10–14 days and 40–60% higher freight costs to voyages from the Gulf and US East Coast to India
India's oil refinery infrastructure is primarily designed for heavy-sour crude (common in Gulf and Russian production); US crude (typically light-sweet WTI) requires refinery configuration adjustments for large-scale adoption

Connection to this news: The 2026 crisis accelerated a pre-existing diversification trajectory. Russia's position as top supplier and the US's emergence as a growing source reflect a hedged strategy: India maintains energy ties with both without fully committing to either, maximising supply security and price leverage.

India's Export Diversification — Africa and South-East Asia as New Markets

The disruption of traditional Middle East export markets during the 2026 conflict accelerated a structural diversification of India's export geography, with Sub-Saharan Africa and South-East Asia absorbing rerouted goods at scale.

Tanzania: bilateral India-Tanzania trade surged from $2.37 billion in FY 2020–21 to approximately $8.6 billion in FY 2024–25 — a 263% increase; a target of $10 billion was set at the July 2025 Tanzania-India Business Forum. Exports to Tanzania reportedly rose over 157% in April 2026 amid Gulf disruptions
South Africa: saw increased Indian exports, particularly in FMCG, pharmaceuticals, and engineering goods; South Africa's own export supply chains to Europe were disrupted by the conflict (freight rates up ~50%), creating opportunities for Indian goods already rerouted via southern African ports
Singapore: served as a transshipment and re-export hub for India's goods diverted from Gulf routes; India's exports to Singapore increased due to entrepôt trade through its port infrastructure. Singapore is India's 6th largest trade partner and largest ASEAN trade partner; bilateral trade stands at approximately $34 billion annually
East Africa corridor: the Cape of Good Hope routing, though expensive, opened India's exporters to East African markets along the route, incidentally building commercial relationships with Tanzania, Kenya, and Mozambique
Freight cost surge: approximately 40–60% increase in shipping costs for Gulf-rerouted cargo; insurance premiums for Gulf-bound vessels became unavailable from most underwriters, effectively halting direct Gulf shipments

Connection to this news: The African trade diversification was initially driven by necessity (Gulf routes blocked) but is expected to persist structurally. India-Africa trade relations, already growing rapidly as part of India's Africa Outreach strategy, received an inadvertent boost from the crisis — with new commercial relationships now institutionalised through CEPA negotiations and bilateral trade agreements.

Key Facts & Data

Hormuz oil transit: ~15–17 mb/d (~20–27% of global seaborne petroleum trade)
India crude oil import dependence: ~88–89% of consumption
Russian crude share of India's imports (FY 2025–26): ~35%
India imports from Oman surge: ~246% year-on-year during crisis
India-Oman bilateral trade (FY 2025–26): $11.18 billion
India-Oman CEPA: signed December 2025; entered force June 1, 2026
Oman LNG imports to India: nearly doubled to $1.4 billion during crisis
India-Tanzania bilateral trade: ~$8.6 billion (FY 2024–25); target $10 billion by 2026
Tanzania exports from India: reportedly up 157%+ in April 2026
India-Singapore bilateral trade: ~$34 billion (FY 2024–25)
India's merchandise trade deficit (February 2026): $27.1 billion
Freight cost increase due to rerouting: ~40–60%
Stranded Indian basmati rice cargo: ~400,000 tonnes (March 2026)
Cape of Good Hope rerouting adds: ~10–14 days transit time
India's strategic petroleum reserve capacity: ~5.33 million tonnes (~10 days of consumption)