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Amid the increasing tension due to the Iran-Israel war, the government of India has increased its purchases of Russian crude oil. The crude oil imported from Russia is double the imports from traditional suppliers such as Saudi Arabia and Iraq.  According to preliminary data provided by global trade analytics firm Kpler, Indian refiners are expected to import between 2 to 2.2 million barrels per day (bpd) of Russian crude this month. This would be the highest monthly volume in two years. In comparison, India imported 1.96 million bpd from Russia in May.

 

 

The government has also increased oil imports from the United States, rising to 439,000 bpd in June from 280,000 bpd in May. Meanwhile, shipments from the Middle East are projected to decline to around 2 million bpd, lower than the previous month’s volume. India, the world's third-largest importer and consumer of oil, has around 5.1 million barrels of crude daily for conversion into fuels like petrol and diesel. Breaking its dependence on Middle Eastern countries for oil, India shifted its sources after Russia’s invasion of Ukraine in 2022, when discounted Russian crude became available amid Western sanctions.

 

The existing conflict in the Middle East has not disrupted oil supplies till now. However, vessel activity from the region suggests a potential decline, says Sumit Ritolia, Lead Research Analyst at Kpler.  According to Ritolia“The number of empty tankers heading into the Gulf has dropped from 69 to just 40,”. Moving ahead, he also said, “Signals from the Gulf of Oman to the Middle East Gulf (MEG) have halved, indicating tightening supplies in the near term.”. The increasing tensions in the region have raised the concerns about the Strait of Hormuz, an important maritime chokepoint through which about 20% of global oil and a substantial share of LNG flows. India receives almost 40% of its crude and half of its natural gas through this strait. Iran has warned to block the Strait following Israel's attacks, increasing threat of disruption in global supply of oil. 

 

Despite these threats, Kpler estimates a low probability of a full blockade. “Iran would risk alienating major allies like China and undo recent diplomatic progress with countries like Saudi Arabia and the UAE,” Ritolia explained. He added that any serious naval buildup by Iran would likely provoke a pre-emptive US military response.India’s import strategy has evolved accordingly. Fortunately, India sources crude oil from Russia through the Suez Canal, Cape of Good Hope, or the Pacific Ocean, and remains unaffected by Hormuz risks. Refiners have also expanded sourcing flexibility by increasing purchases from West Africa, the US, and Latin America, although at higher costs. “The jump in June imports from Russia and the US underscores India’s resilience strategy,” Ritolia said. In the event of a short-term disruption, India may further increase Russian oil intake, turn to alternative suppliers, and even tap into its strategic petroleum reserves, which can cover up to 10 days of consumption.