Russia's Oil Supplies to Keep India's Tanks Full Amid Mideast Turmoil
© Sputnik / Vitaly Timkiv
Subscribe
For nearly three years, Russia has been India's top supplier, holding an over 35% share in the country's crude basket.
The contribution of Russian oil to the Indian economy is set to rise amid the intensifying hostilities between Israel and Iran, experts have said.
Russian crude is acting as a critical buffer for India amid the escalating Middle East crisis, Sumit Ritolia, Lead Research Analyst, Refining & Modeling, at the global market intelligence firm Kpler that closely tracks oil shipments worldwide, told Sputnik India.
Over the past 30 months, Russian oil has steadily supplied over 35% of India's total crude imports, a structural shift that has proven strategically valuable, he added.
"Unlike oil from the Gulf, Russian crude reaches India without passing through the Strait of Hormuz—a chokepoint now under serious threat due to Israeli-Iranian tensions," Ritolia emphasised.
Urals crude travels from Russia's Baltic and Black Sea ports, typically via the Suez Canal or around the Cape of Good Hope, while Eastern Siberia-Pacific Ocean (ESPO) and Sokol grades ship directly from the Far East (Kozmino and De-Kastri) across the Pacific and Indian Oceans to India's eastern coast, he said.
This logistical detachment from Hormuz insulates Russian flows from the immediate fallout of regional escalation, while price discounts—especially for Urals—provide cost stability. In April/May, India imported more than 1.9 million barrels per day (mbd) of Russian oil, highlighting its pivotal role. As insurance costs and freight rates for Gulf flows surge, Russian grades are enabling India to maintain refinery throughput and shield domestic fuel prices from extreme volatility, the crude analyst explained.
This logistical detachment from Hormuz insulates Russian flows from the immediate fallout of regional escalation, while price discounts—especially for Urals—provide cost stability. In April/May, India imported more than 1.9 million barrels per day (mbd) of Russian oil, highlighting its pivotal role. As insurance costs and freight rates for Gulf flows surge, Russian grades are enabling India to maintain refinery throughput and shield domestic fuel prices from extreme volatility, the crude analyst explained.
"Russian volumes are likely to rise further if the conflict intensifies. With physical supply and shipping reliability from the Gulf increasingly at risk, Indian refiners are expected to lean more heavily on Russian barrels, particularly Urals and ESPO, which are already embedded in India's procurement and refining systems," Ritolia emphasised.
If the Strait of Hormuz is disrupted, in addition to Russia, India is expected to quickly diversify crude imports toward other routes already tested by Indian refiners—the United States, West Africa (e.g., Nigeria, Angola), and Latin America (e.g., Brazil, Guyana), the expert said. However, these alternatives come with higher freight costs due to longer voyages and potential tanker shortages from global re-routing, he pointed out.
"India has strategically diversified its crude oil imports to bolster energy security amid ongoing market volatility. With global crude prices hovering above $70 and geopolitical tensions escalating, this move is required as both timely and necessary," Arpit Chandna, Customer Success Manager, Refinitiv, LSEG Business, told Sputnik India.
With India importing nearly 80% of its crude, elevated global prices pose a serious challenge. In this context, Russian oil continues to offer India a strategic advantage — providing reliable supply at more affordable rates. Even as discounts narrow, it remains a cost-effective and stable alternative to global benchmarks, Chandna highlighted.
The current tensions could disrupt key global shipping lanes, as the affected regions lie at the core of major maritime trade routes, he suggested. While seaborne crude trade remains stable for now, any escalation could threaten supplier continuity. Chandna noted that although India’s import bill may ease temporarily due to soft domestic demand and refining margins, the share of Russian crude is likely to remain consistent.
India has added flexibility to its procurement strategy—such as settling Russian cargoes in yuan or dirhams—improving its crisis resilience. If Iran were to close Hormuz entirely, over 60% of India's Middle Eastern supply would be at risk, reinforcing the urgency of accelerating this diversification, the Ritolia stated.
Russian oil is expected to expand its share in India's crude mix in the near term, but India's broader response will be adaptive and multidirectional, prioritising security of supply over cost efficiency, he underlined.
Russian oil is expected to expand its share in India's crude mix in the near term, but India's broader response will be adaptive and multidirectional, prioritising security of supply over cost efficiency, he underlined.
The likelihood of the Strait of Hormuz closing remains low, according to Kpler analysts, due to both geopolitical and economic factors. The Strait handles roughly 34% of global seaborne crude oil. Although US forces would act quickly to restore passage, even a short disruption could push Brent crude well above the $100 per barrel mark, he stated.
If Iran were to close the Strait of Hormuz, the impact on India would be severe and immediate, both in terms of supply security and economic cost, assessed Ritolia before providing a structured breakdown of the likely consequences:
If Iran were to close the Strait of Hormuz, the impact on India would be severe and immediate, both in terms of supply security and economic cost, assessed Ritolia before providing a structured breakdown of the likely consequences:
1. Crude Supply Disruption
More than 60% of India's crude imports transit via the Strait of Hormuz. This includes not only volumes from Iran (historically), but also Iraq, Saudi Arabia, UAE, and Kuwait — India's top suppliers.
A full closure would force Indian refiners to urgently re-route procurement toward non-Gulf sources such as Russia, West Africa, Latin America, etc.
While Russian barrels already account for 35–40% of India's crude imports and provide a cushion, the scale of Gulf disruption cannot be completely offset overnight, leading to tightness in domestic availability.
2. Freight and Logistics Shock
Closure of Hormuz would drive freight rates sharply higher, especially for Very Large Crude Carriers (VLCCs), as global trade flows reconfigure.
India would be forced to source longer-haul cargoes, often requiring an additional 10–20 days of sailing time, increasing landed crude costs substantially.
Insurance premiums would spike, especially for any vessel still attempting to transit the Gulf, adding another layer of cost to delivered crude.
3. Product Price and Inflation Risks
Indian fuel prices—although regulated—would face upward pressure, especially for diesel and LPG, both of which are heavily dependent on Middle East supply.
If the disruption persists, the government may need to increase subsidies to shield consumers, putting fiscal pressure on the exchequer.
Broader inflation could follow due to increased transportation and manufacturing input costs.
4. Strategic and Diplomatic Response
1.
India would likely activate emergency planning measures, including drawing from strategic petroleum reserves (SPRs)—currently holding around 39 million barrels across Visakhapatnam, Mangaluru, and Padur—equivalent to about 9–10 days of net imports at current levels.2.
Diplomatic channels with other countries would intensify, as India seeks reassurances and alternate supply commitments.3.
Trade ties with Russia and West African producers would likely deepen further, accelerating India's structural shift away from the Gulf."A closure of the Strait of Hormuz would represent India's most significant energy security challenge in over a decade. While diversification efforts—particularly toward Russian and Atlantic Basin barrels—have reduced vulnerability, they are not yet sufficient to fully absorb such a shock. India would face higher costs, short-term supply strain, and possible inflationary effects, even as it scrambles to diversify supply routes and partners," Ritolia underscored.
While not a long-term solution, the country's SPRs provide critical breathing space, allowing refiners to manage short-term shortfalls while alternate supply routes are mobilised from Russia or other countries. A coordinated release, possibly alongside inventory drawdowns by key state-run refiners like Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL), would help cushion domestic markets from immediate price or availability shocks, Ritolia concluded.
