India Diversifies Crude Imports as Refiners Hedge Against Hormuz Risks

India is aggressively recalibrating its energy procurement strategy, ramping up imports from Russia and the UAE to safeguard against supply disruptions in the Middle East. As refiners navigate the volatile reopening of the Strait of Hormuz, the country is leveraging discounted Russian barrels and alternative Atlantic Basin sources to ensure energy security.

Russia Solidifies Position as India's Top Oil Supplier

The shift in India's import basket is most evident in the surging volumes of Russian crude. Data from maritime intelligence firm Kpler reveals that India imported an average of 2.66 million barrels per day (bpd) from Russia between June 1 and June 19, a significant jump from the 1.91 million bpd recorded in May.

With June imports expected to potentially exceed 2.35 million bpd, Moscow has cemented its status as India's primary energy partner. This reliance is driven by the competitive discounts offered by Russian barrels, which continue to provide a favorable economic cushion for Indian refiners despite global geopolitical shifts.

Hedging Against Strait of Hormuz Disruptions

India, the world's third-largest energy importer, remains acutely sensitive to any instability in the Strait of Hormuz. The strategic waterway, which facilitates approximately 20% of global oil consumption, recently faced disruptions following regional conflicts. To mitigate these risks, Indian refiners have maintained near-record imports from the UAE, which stood at 636,000 bpd in June, just slightly below the May record of 644,000 bpd.

While a ceasefire between the US and Iran has allowed some shipments to resume—including three Indian-flagged tankers carrying over 860,000 tonnes of crude—the recovery is expected to be sequential. Experts suggest that LPG supplies will likely normalize first, followed by LNG and then crude oil, as shipping companies and insurers rebuild confidence in the route.

Expanding the Sourcing Mix: Venezuela and the US

The recent period of uncertainty has forced Indian refiners to look beyond traditional Gulf suppliers. This diversification strategy has seen a notable rise in imports from Venezuela, which emerged as India's fourth-largest supplier with shipments of 209,000 bpd, though some estimates suggest June volumes could reach up to 400,000 bpd. This provides an essential option for refiners processing heavier crude grades.

In contrast, imports from the United States saw a sharp decline, falling to 91,000 bpd in June from 252,000 bpd in May. While Gulf suppliers are expected to gradually regain market share as the Strait of Hormuz stabilizes, India’s procurement strategy is likely to remain broader and more diversified than in pre-crisis periods to prevent future supply shocks.

Key Takeaways

  • Russia's Dominance: Russian crude imports rose to 2.66 million bpd in June, driven by competitive pricing and steady refinery demand.
  • Strategic Hedging: India is balancing near-record UAE imports with emerging supplies from Venezuela to offset risks in the Strait of Hormuz.
  • Sequential Recovery: Energy analysts expect a phased normalization of Middle Eastern supplies, with LPG recovering faster than crude oil and LNG.