In geopolitical matters, there are times when the bill comes due at once. That was the case for India as the United States Treasury quietly allowed General License 134B to expire about midnight Friday, May 16. The nation's energy planners were facing a dilemma with no clean solution by Monday morning as Brent crude bounced between $107 and $111 a barrel and the Strait of Hormuz was in all practical terms closed by an American naval blockade around Iranian ports. The last official buffer between New Delhi and the impact of secondary sanctions was the waiver granted Indian refiners to continue taking in Russian seaborne crude, already scheduled on tankers. Now that cushion has been removed.

The two stories – the lapsed Russian waiver and the closed strait – are typically recounted separately in the TV studios and newspaper columns. They should not be. They are the same story, from different sides of the Arabian Peninsula, and they lead to the same Indian household filling up at a state-run petrol pump in Maharashtra and the same truck driver who is stuck in the line to fill up because the arithmetic of the jet fuel doesn't work out. Sales of a meticulously planned and calculated American policy have hit a policy that Washington itself engineered in the Gulf, and in the middle of the collision lies our nation.

Start with the waiver, as that is what the policy decision was last week. General License 134B was never a gesture of generosity towards India. A narrow Treasury Department directive first announced in March and extended in April to provide for the processing of cargoes at sea without enforcement action against the banks, insurers and refiners that process them. The idea was to prevent the sudden breakup that would cost American gasoline consumers more than it would cost Moscow in an election year. Treasury Secretary Scott Bessent had publicly agreed to allow it to expire and pushing for an extension would prove politically costly for the Hill. So it died.

Indian refiners are the ones who suffer the consequences. By mid-May, Russian crude was flowing at roughly 1.9 million bpd to India with the highest volumes reaching 2.3 million bpd as refiners bought up crude in anticipation of the deadline. That's about 40 per cent of India's total crude needs from a single sanctioned supplier in a shadow logistics system of opaque tankers, opaque insurance and opaque flag registries. Between the two most flexible private refiners, Reliance Industries and Nayara Energy, they consume a big proportion of those barrels. The state-run Indian Oil, BPCL and HPCL are much more vulnerable to the western banking system and have already started the long and costly transition process.

That pivot isn't a switch. It's a renegotiation of decades-old crude slates, refinery configurations, freight contracts and credit lines. Over the past three years as Urals crude was being purchased on discounts, Indian refineries made optimizations based on the Urals crude chemistry. That means smaller profits, and freight from West Africa or the American Gulf with high landed costs - at the wrong time. By mid-May, floating storage of Russian crude had more than quintupled to exceed 7 million barrels globally as the refineries that were previously lining up to take the oil are suddenly having second thoughts, new Kpler ship-tracking data indicates.

Next add the second crisis to the first crisis. A war zone since late February, the 33-kilometre Strait of Hormuz is home to approximately 20% of the world's oil and 33% of its seaborne LNG. The American blockade of Iranian ports, which began on April 13, was designed to pressure Tehran back into the talks. It has actually closed the choke point to most commercial traffic and placed the whole architecture of Gulf energy logistics on hold. India has a crude import dependency of almost 85 per cent. Prior to the US-Iran war, 45 per cent of such imports flowed through the Strait of Hormuz. Today, that's down close to zero on a meaningful operating basis.

The official response from the petroleum ministry is that diversification has paid off. The country is today getting crude from about 40 different countries, compared with around 20 a year ago, with 70 per cent of imports in theory able to be shipped around the Horn of Hornus. Strategic reserves account for around 60 days worth of crude oil and LNG and 45 days worth of LPG. Oil Minister Hardeep Puri has been stressing that the supply is stable. Technically, all this is correct. Also, it is incomplete. The 80-85% of household cooking gas that traditionally passed through Hormuz can't be supplied from Nigeria overnight. Freight rates have repriced for tankers that are prepared to operate in the partially war-bracketed Gulf. Alternative routes via Fujairah, the Red Sea or the Cape of Good Hope increase the time, cost and risk premium of each cargo.

The financial numbers are beginning to sting. Brent traded at almost $110 a barrel on May 18, nearly 18 per cent higher than the previous month and some 66 per cent higher than it was a year ago. The pass-through is mechanical as the Indian crude basket is synchronised with Brent with a correlation of around 0.98. The rupee is also depressing concurrently, and therefore a barrel is even more expensive in rupees by the time it reaches a refinery gate. The government has agreed to compensate oil marketing companies by about 300 billion rupees to cushion the blow, but that's a fiscal sticking plaster and not a strategy. Retail prices go up, and inflation ensues or state continues to swallow losses until the books no longer balance. There is no 'may be'.

There's also a third front opening, less obvious but potentially more treacherous. The Iranian state-backed media outlets and Revolutionary Guard Corps have been hinting for the past fortnight that the major undersea fibre-optic cables that pass through the strait, such as AAE-1 and the Falcon network, are next on the Iranian leverage list. Then, on May 9, Iran's military spokesperson announced that the nation will "impose fees on internet cables. One article in the IRGC-backed publication Tasnim advocated the idea of exploiting the estimated $10 trillion of daily financial transactions on those cables. One of the world's biggest cable installers, Alcatel Submarine Networks, has stopped repairing the region. Industry analysts say the cables crossing the strait of Hormuz make up less than 1 per cent of the world's international bandwidth, and that a peaceful severing of the cables wouldn't blackout the globe. But two of those cables are Falcon and Gulf Bridge International, which pass through Iranian territorial waters, and one anchor drag from a damaged tanker is all it'll take. That's not a theoretical possibility for India, where the digital economy assumes that the Mumbai to Marseille data path is always available.

Remove the operational information and the strategic picture isn't so pretty. In two months, the ostensible partner the United States has blockaded the waterway supplying nearly half of India's oil, let expire a guarantee of protection for Indian refiners against the risk of falling under the Russian sanctions, and threatened secondary sanctions for any country that purchases cheaper Russian oil. There's a reason for each of these decisions within Washington. When seen together from a planning room in South Block or Mumbai, they read like a coordinated pull of all the economic strings that are important to Indian energy security at the very wrong time. The Gulf is on fire, the Russian channel is being closed, and the alternative is more expensive American and African crude coming in on longer routes much of it, ironically, dollar-denominated and financed by the West.

Analysts tracking the sanctions issue now believe there is a real possibility of a "quieter" and more limited carve-out for Indian's large refiners in the near term, especially in the event of a downturn in world energy supply conditions. The latest gossip among energy intellection circles is that Treasury officials are already working on the model for that scenario. However, hope is not a procurement strategy, and a waiver that is sought every couple of weeks is not the same as energy independence. The lesson of the past six decades is not that India needs more good diplomats; it does, but this is not it. The lesson: an economy that imports 85 per cent of its oil and a similar proportion of cuisine gas via chokepoints that it cannot control has placed other people's quarrels permanently in its path to prosperity. The talk that Delhi has been deferring for 10 years is about electrifying the truck fleet, strategically deepening reserves to become truly strategic, and creating Indian-flagged tanker capacity without shadow, and making energy truly a first order security issue, which it always was. The Treasury Department just put away the putting off.