Amid a major disruption in oil supplies from West Asia, India’s rapid ramp-up of Russian oil imports has significantly cushioned the supply hit. India’s Russian oil imports in March are nearing historic peaks and a similar trend is expected in April as well, according to tanker data and industry insiders and experts. Meanwhile, due to the effective halt in vessel movements through the critical maritime chokepoint of the Strait of Hormuz since early March, imports from West Asia suppliers like Iraq, Saudi Arabia, the UAE, and Kuwait have crashed this month.
India depends on imports to meet over 88% of its crude oil needs; 2.5–2.7 million bpd of India’s crude imports—around half of the overall oil imports—have transited the Strait of Hormuz in recent months, while the longer-term average is around 40%. This oil is mainly from Iraq, Saudi Arabia, the UAE, and Kuwait. The Strait of Hormuz is a narrow waterway between Iran and Oman that connects the Persian Gulf with the Gulf of Oman. It is critical for energy exports from West Asia, with one-fifth of global oil and liquefied natural gas (LNG) flows usually transiting the chokepoint.
Crude oil imports from Iraq and the UAE so far in March have crashed 69.2% and 72.8%, respectively, on a month-on-month basis, while those from Saudi Arabia and Kuwait are down 45.1% and 45.8%, respectively, according to vessel tracking data from commodity market analytics firm Kpler. On the other hand, oil imports from Russia have jumped by 82.3% from February levels to 1.9 million barrels per day (bpd) in the March 1-25 period. So far in March, Russia’s share in India’s oil imports stands at 45.2%, up from 20.1% in February.
Trade sources indicated that India’s Russian oil imports for the entire month could be 2 million bpd, and a similar level is expected in April going by the buying behaviour of Indian refiners amid global supply disruption. Indian refiners have already bought about 60 million barrels of Russian crude for delivery through April, according to market sources.
Before the West Asia conflict began on February 28 with Israel and the US hitting Iran with military strikes and Tehran retaliating with striking neighbouring Gulf countries that house American assets, New Delhi’s oil imports from Moscow were expected to be around 0.8-1 million bpd in March. In February, India’s oil imports from Russia stood at 1 million bpd.
“In historical context, India’s highest monthly procurement of Russian crude since the start of the Russia-Ukraine war was in the around 2–2.1 million bpd range. The current surge is therefore approaching prior peaks, though not materially exceeding them at this stage. What stands out is the speed of the rebound: as Middle Eastern supplies via Hormuz dried up, Indian refiners were able to lift Russian purchases by close to 0.8–1.0million bpd, helping cushion the disruption without materially affecting refinery runs so far,” said Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler.
“Overall, India’s total crude imports are currently down by about 800,000 bpd as of date compared to January-February levels, or pre-conflict levels. However, this has not yet materially impacted refinery runs, which remain broadly stable. Refiners have drawn down commercial inventories to sustain throughput, while product exports continue to track near historical norms. Looking ahead, Russian crude is expected to remain the backbone of India’s import slate,” he added.
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India had, in recent months, cut down significantly on its oil imports from Russia amid trade negotiations with the US, as Washington made it a pre-requisite for scrapping its 25% additional penal tariff on New Delhi. But with the Strait of Hormuz closed for all intended purposes, Washington is now more than happy with India, as well as other importers, consuming more Russian crude, even from sanctioned entities and tankers.
After issuing the US a temporary “waiver” specifically to Indian refiners for buying Russian crude that was already sitting in tankers on water, Washington extended the waiver to all countries. Apart from providing temporary relief to India, experts also see it as part of Donald Trump’s effort to prevent a further and sustained spike in international oil prices—and the consequent rise in domestic fuel prices in the US—given the midterm elections later this year. There are expectations that the waiver could be extended further till vessel flows through the Strait of Hormuz normalise. A similar waiver has now also been issued for Iranian oil already loaded on tankers.
Earlier this month, a senior government official had said that India never stopped buying Russian crude, and this waiver appeared to be more for Washington’s own legal and procedural requirements considering the Trump administration had imposed sanctions on various suppliers and tankers involved in Russian oil trade. Nonetheless, the waiver has evidently emboldened Indian refiners to aggressively procure Russian oil cargoes.
Before the West Asia war, millions of barrels of Russian oil were languishing on the high seas with few willing buyers. This stock build-up was partly due to Indian refiners cutting oil imports from Russia. That oil is now in high demand, with Russian crude even commanding a premium over benchmark Brent crude, as against the usual discount.
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“Russia’s role in India’s crude slate has become much more critical in the current environment… India’s recent increase has been more directly linked to replacing lost Middle Eastern barrels. In other words, India and China remain the larger structural buyer of Russian crude overall, but India’s current surge is more pronounced from a substitution and energy-security standpoint,” Ritloia said.
“Indian refiners have effectively cushioned the loss of Hormuz-linked crude through a sharp increase in Russian imports, supported by alternative Middle Eastern routes and inventory drawdowns. While some pressure on runs is expected, the system remains resilient, with no immediate risk to domestic fuel supply and continued strength in product exports,” he added.
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