Israel's yet-to-be-unveiled response to the Iranian strikes at weekend will continue to flare-up uncertainty in the Middle-East, directly affecting global crude prices which are hovering around a four month-high of $90 per barrel.
It is critical for Indian refiners to increase intake crude oil even if its Russian crude amid heightened uncertainty around Strait of Hormuz, where around a third of global crude supplies pass, Arpit Chandna, an energy specialist at Refinitiv, an LSEG (London Stock Exchange Group) business, told Sputnik India.
"At the time of any geopolitical conflict, especially in the Middle-East, we have witnessed a trend of spike in crude prices. Such an upheaval in the Middle East, which is a major source of global energy exports, presents an opportunity for other sellers to inject their inventories in global supply chain. At the same time, energy-consuming countries tend to increase the intake of energy supplies from all the other viable options in the market," explained Arpit.
"Going by the trend of the last two years wherein Indian refiners have been open to and taken up large volumes of Russian crude, continuing uncertainty in the Middle-East would prompt Indian refiners to keep up their purchases from Russia," the energy specialist predicted.
"Even then, the premium on Russian crude is expected to be lower than the international benchmarks, which makes it a good option for buyers," Arpit said.
He highlighted that there was still a lot of uncertainty on how exactly tensions between Iran and Israel would play out.
Russian imports has helped India meet around 30-40 per cent of its overall demand since last year. Since last year, Russia has overtaken India's traditional suppliers in the Middle-East to become the top source of crude for the fastest growing major economy.
Russian Crude Shipments at a 11-Month High
The comments come against the backdrop of reports suggesting that Russian crude shipments have hit four million barrels per day (bpd) in April, which is an 11-month high.
At the same time, India's largest private refiner Reliance Industries Limited (RIL) has reportedly been looking for Asian buyers to sell West Texas Intermediate (WTI) Midland crude for May loading, after buying several consignments last month at higher prices.
It is not clear at this stage if the tensions in the Middle-East are linked to a surge in outbound crude shipments from Russia.
But, Arpit underlined that Indian refiners have shown a "quite exemplary openness" towards finding cheaper energy avenues due to the fact that India relies on imports to meet around 85 percent of its crude requirements.
"If the prices remain to be spiked up due to geopolitical tensions and Russian crude continues to be a more viable option, then certainly Indian refiners would continue to look to maintain the Russian inflows as we have witnessed in the last two years," the LSEG specialist estimated.
He noted various means and measures have been adopted to circumvent US sanctions.
"Several consumers are resorting to the use of their domestic currencies and other modes of payments to avoid and mitigate the western sanctions," stated Arpit.
The US Treasury has been looking to tighten the G7 price cap and strictly enforce sanctions against Russian shipping giant Sovcomflot and associated tanker fleets.
This month, senior US Treasury officials, during a visit to New Delhi, said that the Biden administration wasn't looking to cut India's oil imports from Russia as long as the $60 price cap was followed. Till date, New Delhi has refused to buckle under western pressure to cut down its energy ties with Russia and has maintained that they are in interest of New Delhi's "energy security".