India Diversifies Oil Imports Amid Strait of Hormuz Uncertainty

As geopolitical tensions impact critical maritime routes, Indian refiners are aggressively recalibrating their energy sourcing strategies. By ramping up purchases from Russia and the UAE, India is effectively hedging against supply volatility following the recent disruptions in the Strait of Hormuz.

Russia Solidifies Position as India’s Top Supplier

India's energy security strategy continues to lean heavily on discounted Russian crude. Data from maritime intelligence firm Kpler reveals a significant surge in Russian imports, which averaged 2.66 million barrels per day (bpd) between June 1 and June 19. This is a substantial increase from the 1.91 million bpd recorded in May.

Industry experts suggest that Russian crude will remain a cornerstone of India's import basket even after Middle Eastern supplies stabilize. The combination of competitive pricing and steady refinery demand makes Moscow's barrels an essential component of India's long-term procurement strategy.

Strategic Hedging: The Role of UAE and Venezuela

To mitigate the risks associated with the Strait of Hormuz—a waterway that carries approximately 20% of global oil consumption—Indian refiners have maintained near-record imports from the UAE. During the June period, UAE imports stood at 636,000 bpd, closely trailing the record 644,000 bpd seen in May.

Furthermore, India is diversifying beyond traditional partners. Venezuela has emerged as a significant player, becoming the country's fourth-largest crude supplier with shipments of roughly 209,000 bpd. Some estimates suggest Venezuelan imports could reach as high as 300,000–400,000 bpd in June, providing much-needed heavy grades for Indian refineries. Conversely, imports from the United States saw a sharp decline, dropping to 91,000 bpd from 252,000 bpd in May.

The Roadmap to Hormuz Recovery

The reopening of the Strait of Hormuz, following a ceasefire agreement between the US and Iran, offers a glimmer of hope for the normalization of energy flows. However, experts warn that the recovery will not be instantaneous or uniform across all fuel types.

Sumit Ritolia, Senior Manager-Modelling at Kpler, notes that the recovery is likely to be sequential. LPG supplies are expected to normalize first, as India has already adapted to months of disruption through alternative routes. This will likely be followed by Liquid Natural Gas (LNG) and crude oil. While the resumption of transit by Indian-flagged tankers and LNG carriers is a positive sign, rebuilding confidence among insurers and shipping companies may take weeks or months.

As the Gulf region gradually regains market share, India’s sourcing mix is expected to remain broader and more diversified than it was prior to the crisis, ensuring a more resilient energy landscape.

Key Takeaways

  • Russian Dominance: Russian crude imports surged to 2.66 million bpd in June, cementing Moscow as India's primary oil supplier due to favorable economics.
  • Diversification Strategy: Indian refiners are actively hedging risks by maintaining high UAE imports and increasing shipments from Venezuela to offset Gulf volatility.
  • Sequential Recovery: While the reopening of the Strait of Hormuz provides relief, LPG is expected to see the fastest supply normalization, followed by LNG and crude oil.