India Boosts Russian and UAE Oil Imports Amid Strait of Hormuz Uncertainty

As Indian refiners navigate geopolitical volatility in the Middle East, a strategic shift in sourcing is underway to secure energy supplies. By ramping up imports from Russia and maintaining high volumes from the UAE, India is effectively hedging against disruptions in the critical Strait of Hormuz.

Russia Solidifies Position as India's Top Supplier

The landscape of India's energy imports has undergone a significant transformation, with Russia cementing its status as the nation's largest crude oil supplier. Data from maritime intelligence firm Kpler reveals that India imported an average of 2.66 million barrels per day (bpd) of Russian crude in June (up to June 19), a substantial increase from the 1.91 million bpd recorded in May.

Experts suggest that Russian crude will remain a cornerstone of India's import basket even as Middle Eastern tensions ease. This is driven by highly competitive discounts and the need for supply security. Projections indicate that June imports could exceed 2.35 million bpd, potentially setting new records for Russian supplies to India.

Hedging Against Middle East Disruptions

India, the world's third-largest energy importer, relies heavily on the Gulf region for crude, LNG, and LPG. Recent tensions involving the closure of the Strait of Hormuz—a waterway carrying 20% of global oil consumption—forced Indian refiners to diversify.

To mitigate risks, India maintained near-record imports from the UAE, standing at 636,000 bpd in June, just slightly below the May record of 644,000 bpd. Additionally, India has looked toward the Atlantic Basin to fill supply gaps. Venezuela has emerged as a key player, with imports reaching 209,000 bpd, while some estimates suggest Venezuelan shipments could hit between 300,000 and 400,000 bpd in June. Conversely, imports from the United States saw a sharp decline, dropping from 252,000 bpd in May to 91,000 bpd in June.

The Sequential Recovery of Energy Flows

While a recent US-Iran agreement has led to the reopening of the Strait of Hormuz, the recovery of energy flows is expected to be gradual and sequential. Indian-flagged tankers have already begun resuming transit, but full normalization will take time as shipping companies and insurers rebuild confidence.

According to Sumit Ritolia, Senior Manager-Modelling at Kpler, the recovery will likely follow a specific order:

  • LPG: Expected to normalize first, as India has already adapted through alternative sourcing.
  • LNG and Crude: These will follow as trapped cargoes are cleared and shipping flows are restored.

While Gulf suppliers are expected to regain market share as the situation stabilizes, India's procurement strategy is likely to remain more diversified than pre-crisis levels to protect against future geopolitical shocks.

Key Takeaways

  • Russian Dominance: Russian crude imports rose to 2.66 million bpd in June, driven by competitive pricing and strategic necessity.
  • Diversification Strategy: Indian refiners are actively using UAE, Venezuelan, and Atlantic Basin supplies to hedge against volatility in the Strait of Hormuz.
  • Gradual Recovery: Energy flows from the Gulf are expected to normalize sequentially, with LPG recovering faster than crude oil and LNG.