How India and China chose differently when Asia needed energy most

The war in Iran has effectively shut down the Strait of Hormuz, one of the world's most critical shipping routes, sending fuel prices spiralling across a continent that is deeply dependent on Gulf oil. In 2024 alone, 84 per cent of the oil and 83 per cent of the liquefied natural gas shipped through the Strait were bound for Asia, and in many Southeast and South Asian states, consumers are panicking, stockpiling fuel, and cutting spending on everything but essential items. Against this backdrop of regional panic, the contrasting behaviour of China and India reveals the kind of regional powers each wants to be.

China's response to the crisis was swift and self-serving. China ordered a suspension of new fuel export contracts and attempted to cancel existing shipments as global fuel markets tightened due to the Middle Eastern war. The consequences for countries that had come to depend on the Chinese fuel supply were immediate and painful. China's suspension affected exports valued at $22 billion and removed a major swing supplier from the market, forcing countries to scramble for alternatives. Australia, Bangladesh and the Philippines were hit particularly hard, given that China had provided roughly a third of Australia's jet fuel and about half of the Philippines' and Bangladesh's supply in 2024. Prices shot up almost overnight, with diesel derivatives in Asia surging to $150 a barrel, jet fuel reaching $163 and gasoline climbing to $139.80 per barrel, up from pre-war levels of around $79 to $92.

To be fair to China, its decision was not made from a position of scarcity. The country had reserves and the capacity to assist. What it lacked was the willingness to do so. With large crude stockpiles and an extensive renewable energy sector, China is better positioned to weather the energy crisis than its Asian neighbours, and that has given the country more geopolitical leverage at a time when the United States is actively looking to counter its influence in the region. Beijing, in other words, calculated that allowing scarcity to spread across the region served its interests better than relieving it would.

The clearest window into this thinking was China's approach to Taiwan. Rather than offering fuel as a straightforward act of regional solidarity, Beijing attached an explicit political condition to any such offer. China offered Taiwan stable energy supplies if the island agreed to peaceful reunification, with Beijing claiming that Taiwan would have better protection for its energy security under a "strong motherland." Taipei rejected the proposal outright.

Taiwanese officials described it as part of a broader campaign of pressure rather than a credible economic solution. The episode lays bare Beijing's underlying approach: energy, during a crisis, becomes a political instrument rather than a shared regional resource. China's own fuel export restrictions expose the limits of its ability to project energy as leverage externally while safeguarding domestic supply, illustrating how global crises amplify existing geopolitical pressures.

India's behaviour during the same period followed a noticeably different logic. Rather than pulling back, New Delhi stepped forward with tangible supply commitments across its neighbourhood. India supplied approximately 38,000 metric tonnes of fuel to Sri Lanka, addressing a significant portion of its immediate requirement. Fuel deliveries to Nepal and Bhutan, both of which are entirely dependent on India, continued without interruption. In Bangladesh, additional diesel shipments were delivered, with further supplies planned through established pipeline infrastructure. These were not isolated gestures made for political optics. They reflected a consistent pattern of supply rooted in India's broader "Neighbourhood First" doctrine, which was now being tested under genuine crisis conditions.

Nepal's situation offers a useful illustration of what this kind of regional commitment means in practice. The country had declared extended government holidays simply to conserve power, a measure that indicates the severity of the shortage. Yet New Delhi had in March assured Kathmandu that fuel supplies would remain regular for at least the next three months. Nepal was not required to negotiate or make concessions. The assurance was given as a function of an existing partnership. India's position as the world's fourth-largest refiner gives it the capacity to respond to the crisis in a way that deepens regional ties and reinforces its standing as a dependable partner in South Asia. 

This capacity was not built overnight. It is the result of years of deliberate investment in refining infrastructure, diversified oil sourcing, and cross-border energy connectivity. India's diversified crude sourcing strategy stands in contrast to the broader South Asian energy landscape, where countries such as Pakistan, Bangladesh, and Sri Lanka remain heavily reliant on Gulf supplies, making them far more vulnerable to disruptions. India's refining infrastructure, operating at high utilisation levels, allows it to act as a supplier to more than 150 countries globally. Beyond the immediate crisis, India has also been constructing something more durable: a shared regional energy architecture that binds its neighbours together through mutual interest rather than political obligation. On 15 June 2025, Nepal began exporting 40 megawatts of electricity to Bangladesh through India's transmission network, following a trilateral agreement signed in October 2024, marking a historic moment for cross-border electricity trade in South Asia. Bangladesh already buys 15 percent of its electricity from India via an established grid, and discussions to connect Sri Lanka's grid to India are at an advanced stage. 

The philosophical gap between these two approaches deserves to be named directly. When China offers energy, as it did with Taiwan, the offer arrives bundled with a political price tag attached to it. When India supplies fuel to Nepal or Sri Lanka, it does so through existing intergovernmental frameworks, with no conditions on sovereignty or political alignment. Looking further ahead, this distinction only grows in significance. Countries that shift from fossil fuels to green energy might find themselves increasingly dependent on China, given its dominance in both green technology and markets. Beijing's long game extends well beyond oil and gas. Controlling the energy systems of the future, whether through solar panels, batteries, or grid technology, represents the next frontier of the same strategic ambition.

This is precisely why India's regional energy policy deserves to be taken seriously as a coherent strategic framework rather than a collection of goodwill gestures. The World Bank estimated in January 2026 that India's economy would grow by 7.2 percent in FY2025/26, helping keep South Asia's overall growth rate elevated. India was managing its own pressures through this crisis and kept its supply commitments to neighbours intact regardless. That kind of sustained reliability, demonstrated under stress rather than claimed in peacetime, is what actually builds regional trust over time.

What this crisis has ultimately shown is that regional leadership is not determined by the size of a country's reserves or the scale of its economy alone. It is shaped, above all, by what a country chooses to do when its neighbours need help and it has the power to provide it.

China, sitting on the largest onshore crude stockpiles in the world, chose export controls and political conditions. India, managing its own strain, chose to keep the fuel moving. One of these choices builds lasting regional credibility. The other builds lasting resentment, and Asia's smaller nations, watching closely, will not soon forget which power answered when the lights began to go out.