India Diversifies Oil Imports Amid Strait of Hormuz Uncertainty

India is aggressively recalibrating its energy sourcing strategy, ramping up imports from Russia and the UAE to hedge against volatility in the Middle East. As refiners navigate the reopening of the strategic Strait of Hormuz, the shift highlights a broader move toward supply security and cost optimization.

Russia Solidifies Position as India's Top Supplier

The landscape of India's crude oil procurement has shifted significantly, with Russia cementing its status as the nation's primary energy partner. 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 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 as Middle Eastern supplies normalize. This is driven by competitive discounts and the need for steady refinery demand, with June imports potentially setting new records.

Hedging Against Middle East Volatility

The recent disruption in the Strait of Hormuz—a waterway carrying roughly 20% of global oil consumption—forced Indian refiners to seek alternatives. While the UAE remains a critical partner, with June imports holding steady at 636,000 bpd (near the May record of 644,000 bpd), the strategy has become one of diversification.

To mitigate risks associated with the Gulf region, Indian refiners have turned to other parts of the globe:

  • Venezuela: Has emerged as a key player, with shipments reaching 209,000 bpd, though estimates for June suggest this could rise to between 300,000 and 400,000 bpd.
  • United States: Witnessed a sharp decline in shipments, falling to 91,000 bpd in June from 252,000 bpd in May.

The Sequential Recovery of Energy Supplies

Following the US-Iran ceasefire agreement, the Strait of Hormuz has begun to reopen, with Indian-flagged tankers and LNG carriers already resuming transit. However, experts warn that the recovery of energy flows will not be instantaneous.

Sumit Ritolia, Senior Manager-Modelling at Kpler, notes that the recovery will likely be sequential. LPG supplies are expected to normalize first, as India has already adapted through alternative sourcing. This will be followed by LNG and finally crude oil. While the reopening is expected to ease freight costs and moderate global energy prices, a full return to pre-crisis trade patterns may take weeks or even months as confidence among insurers and shipping companies is rebuilt.

Diversification Becomes the New Normal

Even as Gulf suppliers gradually regain market share, India's sourcing mix is unlikely to return to its previous concentrated state. By balancing discounted Russian barrels with steady UAE supplies and opportunistic purchases from Venezuela and the Atlantic Basin, India is building a more resilient energy architecture to withstand geopolitical shocks.

Key Takeaways

  • Russia's Dominance: Russian crude imports rose to 2.66 million bpd in June, significantly outpacing all other suppliers due to favorable pricing.
  • Strategic Hedging: India is diversifying its basket with increased Venezuelan shipments to offset supply risks in the Middle East.
  • Phased Recovery: Following the reopening of the Strait of Hormuz, LPG is expected to recover fastest, followed by LNG and then crude oil.