India and Pakistan reached a ceasefire agreement on Saturday, easing fears of a larger conflict after a deadly militant attack in Indian-administered Kashmir last month that killed 26 people. The deal helped de-escalate growing military tension along the border, where India had reportedly deployed surface-to-air missiles.
Although former U.S. President Donald Trump claimed credit for brokering the truce on Truth Social, Indian officials clarified that the agreement came through direct talks between the two countries’ military leaders. According to India, Pakistan initiated the dialogue. Trump had earlier expressed hope for a quick resolution but showed little diplomatic action until the conflict risk grew too severe to ignore.
India said its earlier missile strikes were aimed at militant infrastructure, not civilians or Pakistan’s forces. Still, the standoff raised concerns worldwide, especially due to both countries’ nuclear capabilities. “At this point, the fear for everyone was a nuclear war between two arch rivals,” said a Pakistani security official.
The crisis also spotlighted energy risks in the region. As South Asia’s biggest oil importer, India could face serious disruptions if tensions return. “While the tensions have wide-ranging and serious humanitarian implications, it also brings to the forefront the importance of emergency preparedness in the energy sector,” said energy research firm Rystad Energy.
Energy strategist Umud Shokri warned that ongoing instability could disrupt key shipping routes. He noted that higher freight costs and supply chain disruptions might follow. A longer conflict could raise crude oil prices by $10 per barrel, widening India’s current account deficit by 0.5% of GDP, Shokri added.
India also faces challenges in its trade relationship with the U.S. In 2018, the Trump administration imposed tariffs of 25% on steel and 10% on aluminum from India. This led to a sharp 46% drop in Indian steel exports to the U.S. A report earlier this year from financial firm Motilal Oswal suggested that renewed tariff pressure could drive India to boost domestic manufacturing.
India remains highly dependent on foreign oil. In the 2023–24 fiscal year, it spent about $132.4 billion on crude imports. This figure was 16% lower than the year before, thanks to falling global prices and discounted supplies from Russia. India buys most of its oil from Russia, Saudi Arabia, Iraq, the UAE, and the United States.
Looking ahead, analysts expect India to become the world’s biggest driver of oil demand growth. “China’s role as a global oil demand growth engine is fading fast,” said Emma Richards, senior analyst at Fitch Solutions. She told The Times of India that while China’s share of emerging market oil demand growth may fall to 15%, India’s could rise to 24%. Strong population growth and a slower shift to green energy will likely keep India’s oil consumption rising.
India also hopes to unlock new domestic oil supplies. Four of its largest unexplored sedimentary basins—Mahanadi, Andaman, Bengal, and Kerala-Konkan—could hold up to 22 billion barrels of oil equivalent. Although this is smaller than major reserves like the U.S. Permian Basin, it still offers promise.
India’s state-owned Oil and Natural Gas Corporation (ONGC) plans to invest over $10 billion in deepwater exploration. Petroleum Minister Hardeep Singh Puri recently said the country’s oil and gas sector could attract $100 billion in investment by 2030.
While the ceasefire brings short-term calm, India’s energy security remains tightly linked to regional peace and global oil markets.
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