Navigating the Strait, How Iran’s Permission for Indian Ships Marks a Diplomatic Breakthrough Amid War
As India Secures Passage Through Hormuz for Its Vessels, the Government Also Moves to Strengthen Energy Security with Local Currency Trade and Strategic Reserves
India and four other “friendly nations” have been allowed to move their ships through the Strait of Hormuz, Iran’s Foreign Minister Abbas Araghchi has said, adding that Tehran has established its “sovereignty” over the waterway connecting the Persian Gulf and the Gulf of Oman. The announcement marks a significant diplomatic breakthrough for India, which has been navigating the treacherous waters of the West Asia conflict with a delicate balancing act between its strategic partners.
The Strait of Hormuz, through which more than a hundred ships passed daily before the war, has seen traffic plunge to single digits since the conflict began. But India’s vessels have been among the few granted passage, reflecting the strength of bilateral ties and the effectiveness of New Delhi’s diplomatic engagement with Tehran.
The Diplomatic Breakthrough
“We permitted passage through the Strait of Hormuz for friendly nations including China, Russia, India, Iraq, and Pakistan,” Mr. Araghchi said in an interview with the Iran News Network that was broadcast on Wednesday night. “The Strait of Hormuz is located in the territorial waters of Iran and Oman, and Iran’s sovereignty is established there. After the war, we will also have new arrangements for passing through the Strait.”
The statement is significant for several reasons. First, it confirms that India remains on the list of nations that Iran considers friendly, despite New Delhi’s deepening strategic ties with the United States and Israel. Second, it acknowledges India’s independent foreign policy and its ability to maintain relationships across competing power centres. Third, it provides a measure of certainty for Indian shipping lines, which had been uncertain about whether their vessels would be allowed to transit the strait.
At least four India-flagged ships—Jag Vasant, Pine Gas, Shivalik, and Nanda Devi—have transited the strait since the US and Israel launched the war on Iran on February 28. Their passage is a testament to the effectiveness of India’s diplomatic engagement with Tehran.
The Dena Incident and Indian Assistance
Mr. Araghchi also thanked India and Sri Lanka for their “significant help” after an Iranian vessel, IRIS Dena, was sunk in a US attack in the Indian Ocean during the conflict. The Iranian frigate was attacked and sunk by a US Navy submarine on March 4 off the coast of Sri Lanka in the Indian Ocean while returning from exercises in Visakhapatnam. At least 87 sailors were killed in the attack.
“In the incident of the Dena ship, which was unafraid attacked without any warning, I must thank Sri Lanka and India for their significant help in transferring two other ships to a safe location,” he added.
IRIS Lavan and IRIS Bushehr, which also came to the region to take part in the drills, have now docked in Kochi and Sri Lanka’s Trincomalee, respectively. India’s willingness to provide safe harbour to Iranian vessels, even as it maintains its strategic partnership with the United States, is a striking demonstration of its strategic autonomy.
India’s Local Currency Initiative
As the war continues to disrupt energy supplies and drive up prices, India is also taking steps to insulate its economy from the financial shocks of the conflict. The Centre is “experimenting” with conducting trade with West Asian countries in local currencies, in a bid to mitigate the fiscal double-whammy of surging oil prices and a depreciating rupee, according to two senior officials in the government.
If this initiative fructifies, it would mean India would be paying for about 80 per cent of its oil imports using local currencies rather than the US dollar. This would reduce India’s vulnerability to fluctuations in the dollar exchange rate and insulate it from the impact of US sanctions on other countries.
“India is working out a mechanism to pay for imports from the GCC [Gulf Cooperation Council] countries in local currencies,” a senior government official said. The move is part of a broader effort to internationalise the rupee and reduce dependence on the dollar for trade settlement.
Energy Security: 60 Days of Oil, One Month of LPG
In a bid to end speculation about India’s energy stocks amid the escalating tensions in West Asia, the Ministry of Petroleum and Natural Gas on Thursday said that India has so far arranged a month of liquefied petroleum gas supplies through imports, with constant additional procurement ongoing.
On crude oil, the government said Indian oil companies have secured supplies that would suffice for the next 60 days, while the country already holds stocks enough for 60 days. These 60 days of current stocks, which include crude, diesel and petrol, are an increase over the 50 days of total stocks the government had said it had at the start of the war.
Cumulatively, India currently has a total reserve (storage) capacity of 74 days of fuel stocks, including crude oil, petrol, and diesel. “Nearly two months of steady supply is available for every Indian citizen regardless of what happens globally,” the Ministry said. “Next two months of crude procurement has also been secured. India is completely secure for the next many months and the quantity in strategic cavern storage becomes secondary in such a supply situation.”
Domestic LPG Production Ramped Up
While emphasising that there is no LPG shortage in the country, the government said that India was now producing more LPG than it needs to import. It said that, since the LPG control order issued earlier, domestic refinery production has been ramped up by 40 per cent. This, it said, has brought the daily output to 50,000 tonnes, which is more than 60 per cent of domestic requirements.
Additionally, with respect to imports, the government said that 8,00,000 tonnes of LPG cargoes are en route to India from the United States, Russia, Australia, and other countries. “Approximately one full month of supply is firmly arranged, with additional procurement being finalised continuously,” it stated.
Vikas Kaushal, managing director at state-owned Hindustan Petroleum, said, “Over the past two days, sales have increased by more than 15 per cent on an all-India basis… our supply chains remain strong, our outlets are fully stocked.”
The Geopolitical Landscape
US President Donald Trump, who “postponed” on Monday a threatened strike on Iran’s power infrastructure, has said Tehran should “get serious soon” in talks, “before it’s too late, because once that happens, there is no turning back.” US media have reported that the Pentagon is sending more troops to West Asia in preparation for a possible ground offensive against Iran.
Meanwhile, Pakistan’s Deputy Prime Minister and Foreign Minister Ishaq Dar said “in-direct talks” between the two sides are taking place through messages being relayed by Pakistan. “The US has shared 15 points, being deliberated upon by Iran. Brotherly countries of Turkey and Egypt, among others, are also extending their support to this initiative,” Mr. Dar wrote in a social media post.
Mr. Araghchi, who was Iran’s chief negotiator with the US before the war, also said no talks were being held with the US. “I state firmly that there has been no negotiation with the US. However, in recent days, the American side has begun sending various messages through different intermediaries… and we have responded by stating our positions. It is simply an exchange of messages.”
The Role of the New Mangalore Port
With the New Mangalore Port Authority waiving cargo charges for LPG and crude oil tankers to attract vessels for tiding over the geopolitical crisis in West Asia, more vessels are sailing into the port. This proactive measure has helped ensure that India’s west coast continues to receive essential energy supplies despite the disruption in regional shipping lanes.
Conclusion: Navigating Uncertainty
India’s success in securing passage for its ships through the Strait of Hormuz, its efforts to diversify trade settlement currencies, and its ramping up of domestic energy production all demonstrate a comprehensive approach to managing the crisis. The government has balanced diplomatic engagement with Iran, strategic partnership with the US, and pragmatic measures to protect the economy.
The situation remains fluid. The US is sending more troops to the region, and the threat of a ground offensive looms. Iran has established its sovereignty over the strait and is demanding new arrangements for passage after the war. But for now, India’s ships are moving, its energy supplies are secure, and its diplomatic channels remain open.
The next few weeks will be critical. As the war continues, India will need to maintain its balancing act, ensuring that its strategic relationships are preserved while its immediate energy needs are met. The groundwork laid in recent weeks—the local currency initiative, the ramping up of domestic production, the diversification of import sources—will serve India well, regardless of how the conflict unfolds.
Q&A: Unpacking India’s Diplomatic and Energy Moves
Q1: What did Iran’s Foreign Minister announce regarding passage through the Strait of Hormuz?
A: Iran’s Foreign Minister Abbas Araghchi announced that India and four other “friendly nations” (China, Russia, Iraq, and Pakistan) have been permitted to move their ships through the Strait of Hormuz. He stated that Iran has established its sovereignty over the waterway and that, after the war, new arrangements for passage will be made. At least four India-flagged ships have transited the strait since the conflict began.
Q2: What assistance did India provide to Iran during the conflict?
A: Following the sinking of the Iranian frigate IRIS Dena by a US Navy submarine on March 4, India provided “significant help” in transferring two other Iranian ships—IRIS Lavan and IRIS Bushehr—to safe locations. These vessels have docked in Kochi and Sri Lanka’s Trincomalee respectively. India’s willingness to provide safe harbour to Iranian vessels demonstrates its strategic autonomy despite its partnership with the US.
Q3: What is India’s initiative to pay for oil imports in local currencies?
A: India is “experimenting” with conducting trade with West Asian countries in local currencies to mitigate the fiscal impact of surging oil prices and a depreciating rupee. If successful, India would pay for about 80 per cent of its oil imports using local currencies rather than US dollars, reducing vulnerability to dollar fluctuations and US sanctions. The initiative is part of a broader effort to internationalise the rupee.
Q4: What is the current status of India’s energy reserves?
A: India has secured one month of LPG supplies through imports, with constant additional procurement ongoing. For crude oil, India has supplies secured for the next 60 days, with existing stocks also sufficient for 60 days. Total reserve capacity (including crude, petrol, and diesel) is 74 days. Domestic LPG production has been ramped up by 40 per cent, bringing daily output to 50,000 tonnes—more than 60 per cent of domestic requirements. Additionally, 8,00,000 tonnes of LPG cargoes are en route from the US, Russia, and Australia.
Q5: What is the current diplomatic situation between the US and Iran?
A: US President Trump has postponed a threatened strike on Iran’s power infrastructure and warned Iran to “get serious soon” before it’s “too late.” Pakistan’s Deputy Prime Minister said “in-direct talks” are taking place through messages relayed by Pakistan, with the US sharing 15 points for deliberation. However, Iran’s Foreign Minister stated that there have been no direct negotiations, only an exchange of messages through intermediaries. The Pentagon is reportedly sending more troops to West Asia in preparation for a possible ground offensive.
