India Diversifies Oil Imports as Refiners Hedge Against Hormuz Risks

As geopolitical tensions in the Middle East create uncertainty around the Strait of Hormuz, Indian refiners are aggressively diversifying their energy baskets. By ramping up purchases from Russia and maintaining high volumes from the UAE, India is building a strategic buffer to protect its economy from supply chain disruptions.

Russia Solidifies Position as India's Top Supplier

The shift in India's energy sourcing is most evident in its relationship with Moscow. Data from maritime intelligence firm Kpler reveals that India’s crude oil imports from Russia surged to an average of 2.66 million barrels per day (bpd) in June (up to June 19), a significant jump from the 1.91 million bpd recorded in May.

This trend is expected to continue, with June imports potentially setting new records. For Indian refiners, Russian crude remains a cornerstone of their strategy due to competitive discounts and reliable supply security, providing a vital hedge even as Middle Eastern markets stabilize.

Hedging Against Strait of Hormuz Volatility

The strategic importance of the Strait of Hormuz—which carries roughly 20% of global oil consumption—cannot be overstated. Following recent disruptions caused by regional conflicts, Indian refiners have moved to secure alternative supplies.

While waiting for a full recovery in Gulf exports, India has maintained near-record imports from the UAE, averaging 636,000 bpd in June, just shy of the 644,000 bpd record set in May. This dual approach of relying on discounted Russian barrels while maintaining strong UAE ties allows India to manage the risks associated with the principal export channel for producers like Saudi Arabia and Kuwait.

Emerging Suppliers and Shifting Trade Patterns

India’s diversification strategy has also opened doors to other regions. Venezuela has emerged as a significant player, climbing to become India's fourth-largest crude supplier with shipments of approximately 209,000 bpd, though some estimates suggest June volumes could reach up to 400,000 bpd. In contrast, imports from the United States saw a sharp decline, falling to 91,000 bpd from 252,000 bpd in May.

As the Strait of Hormuz begins to see signs of normalization—evidenced by Indian-flagged tankers and LNG carriers resuming transit—experts suggest a sequential recovery. LPG supplies are expected to normalize first, followed by LNG and finally crude oil.

Long-term Outlook for Indian Energy Security

While Gulf suppliers are expected to gradually regain market share as shipping confidence returns, India's import basket is unlikely to return to its pre-crisis composition. The combination of economic advantages from Russian crude and the need to mitigate geopolitical risks in the Middle East suggests that Indian refiners will maintain a broader, more resilient sourcing mix moving forward.

Key Takeaways

• Russia leads the way: Russian crude imports jumped to 2.66 million bpd in June, cementing Moscow's role as India's primary energy partner.
• Strategic diversification: India is actively utilizing UAE and Venezuelan supplies to offset potential volatility in the Strait of Hormuz.
• Sequential recovery: Following the recent ceasefire, experts predict LPG flows will normalize first, followed by a gradual return of LNG and crude oil shipments from the Gulf.