The Hormuz Closure and the Limits of Sanctions: How Russia Benefited from Iran’s Chokepoint Weapon

Iran War Topic Week

By Rustam Taghizade

The Strategic Paradox

When the Trump administration granted India a 30-day waiver on March 5 to purchase Russian oil, the formal justification was straightforward: stabilize global energy markets after Iran effectively closed the Strait of Hormuz. Yet beneath the surface, a deeper story unfolded. The waiver revealed a tension between two pillars of contemporary U.S. strategy—the use of maritime power to secure global chokepoints and the use of economic sanctions to punish adversaries. In the spring of 2026, those two pillars collided, and Russian oil began flowing to India because Iran had shut the strait.

For 10 months before the Iran war began on February 28, Washington had pressured New Delhi to reduce its imports of Russian crude, and the campaign was partially successful. Russia’s share of Indian oil imports fell from 36 percent to 31 percent by early 2026. The United States had sanctioned Russian energy companies and made clear that continuing to buy Russian oil would jeopardize relations.

Then the war came. Within days, Iran effectively closed the Strait of Hormuz, through which 85–90 percent of India’s crude and liquefied petroleum gas normally transited. Tanker traffic plunged by 97 percent. India’s strategic petroleum reserves stood at barely one month’s supply.

Faced with an energy crisis, New Delhi looked to the only substantial source of crude still within reach: Russian oil already at sea. Approximately 65 million barrels of Russian crude were floating within a thirty-day sailing radius of Indian ports—cargoes loaded before the November 2025 sanctions but now stranded because of the war’s disruption.

The choice for Washington was stark: either insist on sanctions compliance and watch India’s economy suffer or grant a temporary waiver and allow Russian oil to flow. The administration chose the waiver. It did so not because it trusted Moscow, but because the closure of Hormuz had rendered its own sanctions architecture operationally irrelevant.

The Numbers Behind the Decision

The arithmetic was unforgiving. Without the waiver, India’s energy supplies would have faced a catastrophic gap. With the waiver, Russian oil could reach Indian refineries while Washington bought time to try to reopen the strait.

A Game Theory Perspective

The interaction among the four central actors—the United States, Iran, India, and Russia—can be illustrated with a simple payoff matrix. The two primary players are the United States and Iran. Their strategies determine the environment in which India

The matrix shows why the waiver was strategically rational despite its contradictions. When Iran keeps the strait closed and the US maintains sanctions (top-left cell), both lose: the war continues, India suffers, and Russia gets no extra revenue. When the US grants a waiver while the strait remains closed (bottom-left), Iran retains its coercive leverage but Russia gains a vital market—a net positive for Moscow and Tehran, but a loss for Washington’s sanctions regime.

The only outcome that fully satisfies all actors is the bottom-right cell: an open strait and normal oil trade. That cell remains out of reach for as long as the Hormuz closure persists.

The Evolving Waiver Framework

What began as an India-specific emergency measure has since taken on a more structured form. On March 5, the Treasury issued a waiver allowing Indian refiners, IOC, BPCL, HPCL, and Reliance Industries, to purchase Russian crude cargoes that were already in transit. When the Treasury expanded the waiver on March 12–13, Indian refiners remained the only significant buyers of the authorized Russian barrels.

Crucially, the expansion continued to apply only to cargoes already on the water, did not restore formal banking channels, and did not lift underlying sanctions. As Miad Maleki, a former US Treasury official, explained, General License U authorized “the commodity transaction; it says nothing about payment.” The license permits the sale of oil but does not restore banking access or create a formal payment channel, a distinction that allows trade in physical barrels while preserving financial pressure.

On March 20, Washington applied the same waiver model to roughly 170 million barrels of Iranian crude floating offshore. Once again, India remained the only swing buyer. Reliance Industries purchased 5 million barrels of Iranian crude at a $7 premium to Brent, and other Indian refiners reportedly plan to resume purchases. The effect was immediate: India’s participation disrupted China’s near-monopsony over sanctioned Iranian crude, reshaping pricing leverage without formally lifting sanctions.

India’s Strategic Ascent

The waiver’s implications extend beyond temporary oil supply management. Before 2019, Indian refiners imported roughly 450,000 barrels per day of Iranian crude under contracts with the National Iranian Oil Company. They retain the technical configuration and commercial familiarity to scale quickly within short waiver windows—institutional memory that gives Washington a ready-made alternative buyer base whenever it chooses to recalibrate supply pressure.

India’s admission into the Pax Silica on February 20 formalized its role within the US-led supply chain initiative focused on reducing dependence on China in semiconductor and AI production. Prime Minister Narendra Modi visited Israel on February 25–26, where the two countries elevated ties to a “special strategic partnership.” Two days later, Operation Epic Fury began. Together, Pax Silica realigns industrial supply chains while the waiver framework redirects sanctioned energy flows, positioning India within the technological and commodity axes of great-power competition.

What the Crisis Reveals About Maritime Coercion

The episode underscores three limits of maritime coercion as a tool of statecraft.

First, naval power alone cannot guarantee passage through a contested chokepoint. The U.S. Navy maintains two carrier strike groups in the region, yet it could not prevent Iran from functionally closing the strait. Iran’s asymmetric toolkit, cheap drones, naval mines, and shore-based anti-ship missiles, imposes costs that even a superior navy cannot easily neutralize without escalating to a ground invasion, which Washington has repeatedly ruled out. As of March 26, American forces had sunk at least 60 Iranian warships and destroyed numerous fast attack boats, yet the strait remains effectively closed.

Second, economic sanctions are vulnerable to physical disruption of trade routes. Sanctions on Russian oil worked as long as alternative supplies were available. Once the Strait of Hormuz became impassable, those alternatives vanished. India’s energy needs forced a choice between sanctions enforcement and energy security. The latter won.

Third, secondary sanctions lose credibility when the primary chokepoint is closed. The United States spent years building a coalition to enforce sanctions on Russian energy. That coalition expected that compliant states would have access to reliable energy markets. When those markets were cut off by an adversary, the sanctions architecture buckled. India’s waiver was not a sign of policy reversal but a consequence of strategic interdependence.

The New Russia-India Energy Axis

India’s calculus changed rapidly after the war began. By March 19, Russian Deputy Energy Minister Pavel Sorokin and Indian Petroleum Minister Hardeep Singh Puri had reached a “verbal agreement” to negotiate a liquefied natural gas deal, the first such direct supply since the start of the Ukraine war. The two officials also agreed to further increase crude oil sales to India, which could double from January’s levels to at least 40 percent of India’s total imports in about a month.

Indian refiners have already purchased approximately 60 million barrels of Russian oil for April delivery, which is more than double February’s volumes. The purchases are priced at $5–15 per barrel above Brent, reflecting the shift to a seller’s market.

Some Indian policymakers have lamented that New Delhi cut Russian crude imports as a concession to the U.S. before the war. A government briefing note prepared for the cabinet secretariat on March 20 warned that a prolonged disruption of oil flows from the Middle East would prompt a cascade of economic challenges: higher inflation, a weaker currency, and rising foreign debt. Export growth could take a hit of between 2 and 4 percent, and wholesale inflation could rise by 0.3 to 0.7 percent.

As Ajai Malhotra, a former Indian ambassador to Moscow, put it: “India chose the course that best served its national interests, anchored in a long-standing and trusted partnership with Russia.”

The Iranian Calculation

Iran, for its part, has calibrated its control over the strait with precision. Satellite data and marine traffic analysis show that between four and five vessels now transit the strait daily, down from 151 before the war. Most of those getting through are linked to Pakistan, China, and India—countries Iran does not consider “aggressors.”

Vessels seeking passage have reportedly stopped at Qeshm Island, where Iranian authorities check ownership, insurance, and crew connections to ensure no link to the U.S. or Israel. Some ships have also navigated outside normal shipping channels, hugging the Iranian coastline to avoid the most contested waters.

Homayoun Falakshahi, head of crude oil analysis at Kpler, noted that Iranian crude often remains unsold until reaching Asian discharge zones such as Singapore or Malaysia. By releasing cargoes under the waiver, Washington created immediate supply effects. “Now that India has entered as a competitor, the price in China will most likely increase,” Falakshahi said.

Long-Term Implications

If the Hormuz closure persists, Washington will face increasingly difficult trade-offs. The most immediate is whether to extend the waiver beyond the current framework, expand it to cover future cargoes, or allow the sanctions regime to collapse entirely. The second is whether to invest in alternative supply chains that bypass the Gulf—a process that would take years. The third is whether to accept that the era of frictionless maritime sanctions is over.

The United States is also preparing to launch a new insurance program for ships moving through the strait, providing government-backed guarantees along with naval support. First announced on March 3, the program is expected to begin soon, but there is no clear evidence that any ships have yet used it. Insurance remains available from commercial markets including Lloyd’s of London, but the cost has increased sharply. This suggests that the main concern for shipowners is not insurance, but the risk of attacks.

Treasury Secretary Scott Bessent has expressed confidence that traffic will increase. “We have seen more ships coming in and out of the Gulf today than we saw yesterday, and that’s just the beginning,” he said on March 26. Whether that confidence is justified remains to be seen.

This structural contradiction is now colliding with a second, even more politically charged layer: the public discussion of how the war might end. Leaks from the administration, deliberately planted, suggest two possible “victory” scenarios: seizing Kharg Island or removing Iran’s enriched uranium stockpile from Isfahan. Neither withstands basic scrutiny. Kharg is a single pipeline fed by one onshore pumping station. A single bomb could disable it without risking a Marine expeditionary unit. Isfahan’s nuclear site is buried under hundreds of tons of rubble from previous strikes and lies 400 miles inland. No amphibious force could realistically excavate and extract anything. What these narratives reveal is not a military strategy but a political one. The administration is looking for a way to manufacture a success. The hardware moving into the Gulf and the carefully leaked conversations do not match the facts on the ground. They match the need for a story.

Conclusion

The March 5 oil waiver was not an anomaly. It was the inevitable result of a collision between two core elements of U.S. strategy: using maritime power to secure chokepoints and using economic sanctions to isolate adversaries. When those elements come into conflict, the more immediate one, physical access to energy, will usually prevail.

The Strait of Hormuz remains closed. Until it opens, the contradictions will persist. In those contradictions, Russia has found an unexpected opportunity to sell its oil, India has secured a necessary supply, and the United States has been reminded that even the most powerful navy cannot always enforce a sanctions regime without a secure strait. What began as a temporary wartime measure is now shaping a broader realignment, with India positioned at the center of both the technological and commodity axes of great-power competition. As a result of this complex historic moment, Russia has regained market access at a critical moment, while the United States has discovered that maritime coercion, however potent, cannot substitute for a functioning global energy architecture—one that its own sanctions policies helped dismantle.

Rustam Taghizade is a geopolitical risk analyst specializing in maritime security, energy geopolitics, and the Caspian-Middle East corridor. He has contributed to Al Jazeera and is currently co-authoring a study on Iran’s post-war trajectory.

References

[1] Iran International. “US may deploy up to 17,000 troops near Iran as war enters new phase — WSJ.” March 26, 2026.

[2] The Jerusalem Post. “Voices from the Arab press: Iran threatens global shipping in Strait of Hormuz.” March 21, 2026.

[3] News On AIR. “United Arab Emirates on heightened alert amid rising West Asia tensions.” March 14, 2026.

[4] Central News Agency (Taiwan). “Bessent: Insurance program for Strait of Hormuz shipping to launch soon.” March 27, 2026.

[5] Hindustan Times. “Trump’s Iran war pushes India to rekindle old friendship with Russia.” March 26, 2026.

[6] Radio-Canada International. “How some ships are still getting through the Strait of Hormuz as Iran war drags on.” March 26, 2026.

[7] China Energy News. “India purchases 60 million barrels of Russian oil for April supply.” March 26, 2026.

[8] Hellenic Shipping News. “Container Shipping: Iran war amplifies outlook uncertainty.” March 26, 2026.

[9] SETN News. “US considers seizing Kharg Island.” March 26, 2026.

[10] Marine Insight. “U.S. Set To Launch Insurance Program To Revive Shipping Through Strait Of Hormuz.” March 26, 2026.

Featured Image: Arleigh Burke-class guided-missile destroyer USS Rafael Peralta (DDG 115) enforces a maritime blockade against an Iranian-flagged vessel. (U.S. Central Command photo)

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