India's Russian crude oil imports reached a five-month low in September, dropping to 1.75 million barrels per day, as Indian refiners strategically diversify their energy supplies amidst evolving geopolitical landscapes and robust domestic demand, according to ship tracking data.
Saudi Arabia's East-West pipeline shutdown could make crude costlier for India as refiners face fewer supply routes and rising freight and insurance costs.
'In the current environment, India is effectively paying a premium for supply security and diversification.'
India is significantly expanding its crude oil sourcing to Latin America, with Venezuela emerging as a major supplier, as geopolitical disruptions in the Middle East and the Strait of Hormuz compel the world's third-largest oil consumer to diversify its energy supplies.
China sailed through the crisis in the Strait of Hormuz relatively unscathed even as the impact of its steps shielded other consuming nations from having to pay high crude oil prices.
India significantly increased its crude oil imports from Russia and the United Arab Emirates in June, securing supplies as the Strait of Hormuz began to reopen, with Russian barrels remaining attractive due to discounts and UAE supplies offsetting earlier uncertainties.
India's crude oil imports from Russia reached a record high of approximately 2.73 million barrels per day (mbpd) in June, driven by discounts of $2-5 a barrel. This surge comes as the West Asia crisis disrupted supplies from traditional sources and China reduced its own purchases, leading Russia to offer more favourable terms to India.
'Historically, India has depended on the Middle Eastern Gulf for nearly 90 per cent of its LPG imports. Shifting to alternative suppliers is not something that can happen quickly.'
Indian refiners are recalibrating their crude sourcing strategy due to supply disruptions in West Asia, leading to Venezuela and Brazil emerging as top five suppliers in April, replacing traditional sources like Iraq and the United States.
India bought 1.87 million barrels of Russian oil per day in May so far, meeting approximately 40 per cent of its oil imports.
India will continue to purchase Russian oil based on commercial viability and energy security needs, irrespective of US sanctions waivers, according to a senior petroleum ministry official.
A US-sanctioned tanker carrying Iranian crude oil has rerouted mid-voyage from its previously indicated destination of India to China, raising questions about payment issues and the future of India's Iranian oil imports.
Indian companies, however, are now paying a premium of $6-$7 a barrel for Russian oil, compared with discounts of $8-$10 a barrel before the start of the conflict.
India's plans to ration the consumption of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) - in response to reduction in their import owing to war in West Asia - may fall short of what is needed to meet domestic needs.
India has refuted claims of payment issues hindering crude oil imports from Iran, clarifying that refiners have the flexibility to source oil from various global suppliers. The Ministry of Petroleum and Natural Gas addressed reports of a tanker rerouting to China, emphasising standard industry practices and secured oil requirements.
Analysts predict India will face oil price volatility and macroeconomic effects due to the escalating Iran crisis, though the country's oil supply chain is not yet structurally insecure.
Replacing over a third of India's oil imports at competitive rates is going to be a challenge, said traders from State refiners, even though some progress was made in the last two months.
Indian refiners have access to only limited Iranian volumes compared with Russian oil, and even the barrels on offer come with 'too many hassles'.
Indian private sector and State-run refiners continued to receive crude oil from Russian suppliers even after November 21 -- the winding-down date for US sanctions on supplies from leading Russian oil producers imposed in October -- as new intermediaries sprung up in West Asia to sell the oil, according to senior refining sources and ship tracking data.
A US-sanctioned tanker carrying Iranian crude oil is heading to India, marking the resumption of oil imports from Iran after seven years.
'No one can or will bar India from pursuing its energy goals as it wishes.' 'The US FTA wording may sound more restrictive, but the underlying reality will not undermine India's sovereign energy decisions.'
24 Indian-flagged vessels with 677 Indian seafarers were currently located west of the Strait of Hormuz, and four vessels with 101 Indian seafarers were stationed east of the strategic waterway.
India possesses approximately 100 million barrels of commercial crude oil stocks, capable of covering 40-45 days of its requirements if flows through the Strait of Hormuz are disrupted, according to Kpler.
The Kremlin states it has not received confirmation from India regarding a halt to Russian oil purchases, following claims made by former US President Donald Trump. Russia affirms its commitment to strengthening relations with India.
Delhi should keep all its options open in what is essentially a transitional period in the geopolitics of energy rather than remain a gatekeeper serving Trump's 'America First', suggests Ambasssador M K Bhadrakumar.
After a three-month slowdown, India's oil imports (already landed) from Russia bounced back in the first 15 days of October to 1.8 million barrels per day.
The Kremlin has stated that India is free to purchase oil from any country, dismissing claims that India agreed to reduce Russian oil imports. Russia maintains that energy trade with India benefits both nations and contributes to international energy market stability.
India has gained the least since Russia invaded Ukraine in February 2022 and was penalised the most, while the US, China and the European Union emerged as the biggest beneficiaries from the war.
India's crude oil imports from Russia strengthened in the first half of October, reversing a three-month slide in arrivals seen during July-September as refineries were back on full stream to meet festive demand, according to ship tracking data.
India is set to reduce its direct imports of Russian crude from late November, following new US sanctions on Rosneft and Lukoil, effective November 21.
India's decision to import LPG from the US helps it to diversify sources as it reduces almost full reliance on West Asian countries for supply of the country's primary cooking fuel.
India will restrict crude oil purchases from Russia as part of an agreement reached with the US in exchange for lower trade tariffs, sources said, adding imports will continue for now by refiners such as Nayara Energy, which have no other alternative source. US President Donald Trump announced overnight that the United States will cut the reciprocal tariff on imports of Indian goods to 18 per cent from 25 per cent under a broader bilateral understanding.
'Indian refiners can operate without Russian crude from a technical standpoint, but the shift would involve major economic and strategic trade-offs'
'The immediate impact for India will be very minimal as the share of Venezuela in our total overseas production is very low.'
Sanctioning Russian oil would have led to a sharp surge in oil prices to above $80 per barrel levels, which would impact pump prices in the US ahead of midterm elections next year.
In a first, Indian oil public sector undertakings (PSUs) finalised a one-year contract to import around 2.2 million tonnes (mt) of liquefied petroleum gas (LPG) from the US. The LPG import deal comes at a time when negotiations for an India-US bilateral trade agreement (BTA) are gathering steam. Earlier in the month, US President Donald Trump had said Washington and New Delhi were "pretty close" to reaching a fair trade deal.
India's crude oil imports from Russia saw a marginal decline in September, but continued to account for over one-third of the country's total oil purchases, despite US pressure to curb the trade over concerns that it supports Moscow's war effort in Ukraine. India's crude imports in September were around 4.7 million barrels per day, up 220,000 bpd month-on-month and flat year-on-year.
Indian refiners are likely to import 2-2.2 million barrels per day of Russian crude oil in June - the highest in the last two years and more than the total volumes bought from Iraq, Saudi Arabia, the UAE and Kuwait, preliminary data by global trade analytics firm Kpler showed.
India's annual oil import bill could rise by $9-11 billion if the country is compelled to move away from Russian crude in response to US threats of additional tariffs or penalties on Indian exports, analysts said. India, the world's third-largest oil consumer and importer, has reaped significant benefits by swiftly substituting market-priced oil with discounted Russian crude following Western sanctions on Moscow after its invasion of Ukraine in February 2022.
India's purchase of Russian oil has risen to 2 million barrels per day in August, as refiners continue to prioritise economic considerations in their sourcing decisions. As much as 38 per cent out of an estimated 5.2 million barrels per day of crude oil imported in the first half of August came from Russia, according to global real-time data and analytics provider Kpler.
