![\"Hormuz](\"https:\/\/static.toiimg.com\/thumb\/msid-132110720,imgsize-834716,width-400,height-225,resizemode-4\/oil-imports-from-russia.jpg\" "\\"It")
<\/div>\n<\/div>\n<\/div>\nThe US-Iran war has pushed India\u2019s crude oil imports from Russia to an all-time high – beyond levels seen when Russian crude was available at big discounts in the first few years of Moscow\u2019s war with Ukraine. At over 2.5 million barrels per day, Russian crude made up over 50% of India\u2019s crude procurement in June as refiners stocked up on oil to ensure a more comfortable position for the coming months.This was in part aided by the Donald Trump administration\u2019s waiver of sanctions on Russian oil. That waiver has now lapsed. Sanctions tend to make procurement economically unviable. It is clear that Russia continues to be India’s single most important crude supplier and remains at the core of the country’s import strategy. But will such high levels of imports continue? With sanctions waiver on Iran oil and reopening of the Strait of Hormuz, Middle East oil supplies will gradually be back for India to pick up. Proximity of Middle East countries to India also makes crude via that channel more lucrative.So, will Russia continue to be India\u2019s largest crude oil supplier, or will the mix change?<\/span><\/p>\n Russia has emerged as the dominant supplier of crude oil for India – with imports touching over 240 million barrels in the four months since the US-Iran conflict began. In fact, crude imports from Russia are over 4 times the nearest supplier – UAE at over 58 million barrels. Middle East crude through alternative routes continues to form a big part of India\u2019s crude imports with UAE and Saudi Arabia ranking as the second and third largest suppliers since March respectively. Yet another player that has emerged is Venezuela – it now ranks among the top 5. According to experts, India\u2019s crude imports during the US-Iran war show a diversified and dynamic procurement strategy.Sumit Ritolia, Lead analyst, Modelling and Refining at Kpler says, \u201cOver the past 100 days, India has arguably been one of the best-positioned major importers, successfully maintaining crude inflows through proactive diversification and procurement strategies.\u201dImport data reflects this resilience. Despite supply disruptions in parts of the Middle East, India’s crude imports from alternative suppliers have remained robust, he says.He notes the success of Indian refiners in securing replacement barrels while preserving refinery economics.So, will Russia continue to dominate India\u2019s crude oil imports?<\/span><\/p>\n What would be interesting to note in the long-term is the impact of the MoU between US and Iran as Iran would now be free to trade with a broader set of partners. The US has waived sanctions of Iranian crude oil for 60 days. That expires on August 21, 2026. But will India buy? Experts are not sure of how Indian refiners would see this limited window.\u201cAt this stage, we do not expect any meaningful increase in Iranian crude imports into India. Even if limited cargoes materialize, Indian refiners are already largely covered through the first half of August, leaving little immediate need for additional purchases,\u201d says Kpler\u2019s Ritolia.\u201cMoreover, any increase would need to be viewed in the context of the current sanctions waiver. As a result, we may see one or two opportunistic cargoes during July or August, but any sustained or meaningful return of Iranian crude to India’s import slate is more likely to be considered only after the first half of August\u2014and only if the regulatory environment allows,\u201d he adds. <\/p>\n Importance of Hormuz for global oil flows<\/p>\n<\/div>\n<\/div>\n It\u2019s evident that India\u2019s decision to procure from Iran would be driven by long-term considerations of whether the sanctions waiver appears to be permanent.Sourav Mitra, Partner \u2013 Oil & Gas, Grant Thornton Bharat says that given Iran\u2019s proximity to India, one can expect Iran to become a meaningful supplier in the long run which could impact the shares of Russia and Gulf countries in India\u2019s crude basket.\u201cThis will, however, be subject to how stable the peace treaty between US and Iran would be and how India and Iran can establish a payment mechanism that is agreeable to both parties. That said, in the near term, Russia is still expected to be a dominant crude supplier for India,\u201d he tells TOI.<\/p>\n Importantly, India\u2019s consistent position is that it needs no US permission to buy crude; the waiver merely eased banking, insurance and compliance friction. Before February 2022, Russian crude was barely at 2% of India\u2019s supply basket. By 2023\u201325 it had become the single largest source at roughly a third of imports, on the back of discounts that ran as wide as $15-30 a barrel at the peak. \u201cThat structural share never truly left. What changed earlier this year was a brief, sanctions-driven dip: Russia\u2019s share fell below 25% for the first time in two years, and India began drifting back to a Gulf-heavy basket. The Hormuz crisis reversed that overnight and sent Indian refiners straight back to the one large and reliable source still moving freely, i.e., Russia,\u201d says Sourav Mitra.\u201cIndian refiners have spent four years building the payment rails, shipping arrangements and refinery configurations to run Russian medium-sour grades at scale. The US has shown no appetite to impose secondary sanctions on the world\u2019s third-largest oil importer in the middle of a Gulf crisis it is itself trying to defuse. Enforcement is what could change the situation and that has not arrived,\u201d he notes.According to the Kpler analyst, India’s supply position appears comfortable. \u201cRising exports from Africa, Russia, Venezuela, and higher OPEC+ production, together with continued crude flows through the Strait of Hormuz, should provide ample sourcing options. The recent decline in crude prices also suggests that the market is increasingly comfortable with supply availability despite lingering geopolitical risks,\u201d he says.But the big question is: Will this high level continue?<\/span>Prashant Vashisht, Senior Vice President and Co-Group Head at ICRA sees Russia continuing to dominate India\u2019s crude import mix in the near term as global supply is gradually restored.\u201cHow big a supplier Russia will be depends on when things in the Middle East go back to normal in terms of supply. 10 to 11 million barrels of crude capacity was shut in. When you shut the facility, it will not immediately go back to their old supply. It may take six months to one year,\u201d he tells TOI.\u201cSecondly, strategic reserves of various countries were released to make up for the supply deficit. These countries will try to refill strategic reserves. So, there will be a lot of buying now of crude to fill up the strategic reserves, which will not be just consumer demand. I think we’ll continue to buy Russian oil,\u201d he adds.As Grant Thornton Bharat\u2019s Sourav Mitra says: June was a peak, not a new plateau.\u201cRussia will stay a major supplier in the near term, but this is not because India chose Moscow over Washington. As the strait reopens and the discount narrows, expect a gradual rebalancing toward the Gulf \u2013 but toward a basket in which Russia remains a large and strategically useful component,\u201d he says.India\u2019s real doctrine here is neither pro-Russia nor pro-anyone; it is pro-optionality. In all this the next major factor to look at would be how Iran will fit into the picture in the long-term, he adds.\u201cIndia has now learned that high dependence on a single point can be catastrophic. This has strengthened the case for keeping Russian, Venezuelan, American barrels, and even possibly Iranian barrels all in play. That is the diversification India will defend. The major factor to see will be how strictly the US imposes the bans and what impact it may have on India-US trade relations,\u201d he concludes.<\/div>\nIndia\u2019s Top 5 crude oil suppliers<\/h2>\n<\/p>\n
The Iran factor<\/h2>\n<\/p>\n
![\"Importance](\"https:\/\/static.toiimg.com\/photo\/msid-132110670\/importance-of-hormuz.jpg\" "\\"Importance")
<\/p>\nRussian oil: Will high import levels continue?<\/h2>\n<\/p>\n