While crude oil and gas prices have remained elevated over the past two months, India’s heavy dependence on these commodities has intensified concerns over energy security.
Against this backdrop, Prime Minister Narendra Modi’s five-nation tour has reinforced expectations that the country could secure long-term energy supply arrangements while also strengthening ties with Europe and the Gulf region.
PM Modi began his five-nation tour with a visit to the United Arab Emirates on 15 May, where he held talks with UAE President Mohamed bin Zayed Al Nahyan. During the visit, both countries signed several key agreements, including deals related to petroleum and LPG supply.
The agreements come at a crucial time, as India is grappling with an energy crisis and rising petrol and diesel prices triggered by the ongoing conflict in West Asia. After the UAE, the Prime Minister will also visit the Netherlands, Sweden, Norway and Italy
Last month, the UAE announced its exit from OPEC, a move expected to boost its oil output and support importing nations such as India.
The US-Israel conflict with Iran, now in its third month, has disrupted global energy markets following the closure of the Strait of Hormuz, a critical chokepoint through which nearly 20% of global oil supplies pass.
Over the weekend, PM Modi urged a series of austerity measures aimed at conserving the country’s foreign exchange reserves, including reducing fuel consumption, avoiding foreign travel for a year, and curbing non-essential gold purchases.
Just days after the Prime Minister’s appeal, the government increased customs duty on precious metals, while oil marketing companies in India raised petrol and diesel prices by ₹3 per litre on Friday.
India-UAE energy deals may improve long-term supply visibility
Ponmudi R, CEO of Enrich Money, said PM Modi’s visit to the UAE and four other countries can help India manage the oil price shock, but it cannot immediately solve the crude price problem.
He said oil prices are not rising only because of demand but also due to fear, supply disruption, insurance risk, shipping uncertainty, and the Strait of Hormuz premium. Brent crude has already moved around the $100–105 zone after earlier spikes above $120, while India has also raised petrol and diesel prices by ₹3 per litre due to pressure on oil retailers.
The UAE visit is important because India is looking at long-term energy supply arrangements, LPG supply, and expansion of strategic oil reserves. He added that India and the UAE have signed petroleum-related agreements during the visit, which can give India better supply visibility and reduce short-term panic.
Ponmudi further said the real solution depends on three things — de-escalation in the Iran war, reopening and stabilisation of shipping routes, and coordinated supply support from major producers. While diplomacy can reduce the risk premium, he said, physical supply disruption cannot be solved in one meeting.
Paints, aviation and logistics sectors may remain under pressure
For India, Ponmudi said the immediate focus will be energy security, not cheap oil. He added that the government will try to secure a more assured supply, diversify sourcing, protect strategic reserves, and reduce the impact on inflation, fiscal pressure, and the rupee.
“My view is clear: Modi’s visit can cool sentiment and reduce panic in crude markets if it produces firm supply commitments. But oil prices will fall meaningfully only when the geopolitical risk premium comes down. Until then, crude will remain volatile, and India must prepare for a higher-for-longer energy cost environment,” Ponmudi said.
On the market impact, he said oil-sensitive sectors such as paints, aviation, logistics, OMCs, and chemicals may remain under pressure, while investors should closely watch crude prices, USD/INR movement, and inflation expectations before taking aggressive positions.
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