India Diversifies Oil Imports as Refiners Hedge Against Hormuz Risks

Indian refiners are aggressively recalibrating their energy sourcing strategies, ramping up imports from Russia and the UAE to mitigate supply uncertainties. This tactical shift comes as the industry awaits a full recovery of Gulf exports following the recent reopening of the strategic Strait of Hormuz.

Russia Solidifies Position as India’s Top Oil Supplier

Russian crude has become the cornerstone of India’s energy security, driven by competitive pricing and steady refinery demand. According to data from maritime intelligence firm Kpler, India's 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.

Experts suggest that Russian supplies will likely remain a permanent fixture in India's import basket, even as Middle Eastern supplies stabilize. The favorable economics of discounted Russian barrels provide a crucial hedge against global price volatility and supply chain disruptions.

The global energy market has been on edge following the closure of the Strait of Hormuz, a maritime choke point that carries approximately 20% of global oil consumption. While a ceasefire agreement between the US and Iran has led to a cautious reopening, geopolitical tensions persist.

Indian refiners have been working to balance their portfolios during this period of instability. While imports from the UAE remained near record levels at 636,000 bpd in June (just shy of May's 644,000 bpd), the volatility has prompted a broader diversification strategy. Significant shifts were also noted in other regions: imports from the United States fell sharply to 91,000 bpd from 252,000 bpd in May, while Venezuela emerged as a key player, providing 209,000 bpd to bolster the supply mix.

Sequential Recovery: LPG, LNG, and Crude Oil

The recovery of energy flows through the Strait of Hormuz is expected to be sequential rather than instantaneous. Sumit Ritolia, Senior Manager-Modelling at Kpler, indicates that LPG supplies are likely to normalize first, as Indian importers have already adapted through alternative routes. This will be followed by LNG and eventually crude oil.

Recent progress is already visible, with three Indian-flagged tankers carrying over 860,000 tonnes of crude and an Indian LNG carrier successfully resuming transit. However, a full return to pre-crisis trade patterns may take weeks or months as insurers and shipping companies rebuild confidence in the waterway.

A New Era of Diversified Sourcing

While Gulf suppliers are expected to gradually regain market share, India’s energy procurement strategy is evolving. The country, which imports 88% of its crude and 65% of its LPG, is moving toward a broader, more resilient sourcing mix. By balancing high-volume Middle Eastern imports with discounted Russian crude and Atlantic Basin supplies, India is building a buffer against localized geopolitical shocks.

Key Takeaways

  • Russia's Dominance: Russian crude imports rose to 2.66 million bpd in June, cementing Moscow's role as India's primary energy partner.
  • Strategic Hedging: Indian refiners are utilizing a mix of UAE, Venezuelan, and Russian oil to offset risks associated with the Strait of Hormuz.
  • Phased Recovery: Energy flows are expected to recover in stages, with LPG normalizing faster than LNG and crude oil shipments.