A high-stakes meeting between U.S. Senator Marco Rubio and Indian Prime Minister Narendra Modi is underway in New Delhi, driven by an urgent need to address India's severe energy crisis.
The core of the problem is the intermittent closure of the Strait of Hormuz by Iran since February 2026. This vital waterway carries about 20% of the world's oil, and its disruption sent Brent crude prices soaring to nearly $126 per barrel. For India, which imports the vast majority of its oil and gas—much of it through Hormuz—the impact has been direct and damaging.
This energy shock triggered a cascade of economic problems. First, India's import bill skyrocketed. For every $10 increase in the price of a barrel of oil, India's annual import costs rise by nearly $17 billion. Second, this financial pressure, combined with foreign investors pulling money out of the country, caused the Indian rupee to fall to a record low. The Reserve Bank of India had to sell nearly $10 billion in a single month just to slow the currency's decline.
The economic pain soon translated into political pressure. In mid-May, the Indian government was forced to raise retail prices for gasoline and diesel for the first time since the crisis began. This move, while necessary, directly impacts consumers and intensifies the government's need to find a stable and affordable energy supply.
This is where the U.S. enters the picture. The Rubio-Modi meeting is focused on a pragmatic solution: the U.S. can become a more significant and reliable energy supplier to India. Recent data already shows this pivot is happening, with U.S. crude oil and LPG shipments to India hitting record highs. In return for these crucial energy supplies, Washington is looking for a thaw in trade relations. A framework for an interim trade deal, announced in February, aims to lower the tariffs that have strained the relationship since 2025, providing the perfect political cover for this energy partnership.
In essence, the meeting is a strategic negotiation to turn a crisis into an opportunity. By securing U.S. energy, India can diversify away from the volatile Middle East, while the U.S. gains a major energy customer and advances its trade agenda.
- Glossary
- Strait of Hormuz: A narrow strait between the Persian Gulf and the Gulf of Oman. It is a critical chokepoint for global energy supplies, with about 20% of the world's seaborne oil passing through it.
- Brent Crude: A major benchmark price for purchases of oil worldwide, sourced from the North Sea.
- Foreign Portfolio Outflows: The selling of a country's financial assets, such as stocks and bonds, by foreign investors, who then move their money out of the country.