India Increases Russian Oil Imports Amid Tightening Middle East Supplies

India's Crude Purchases from Russia Remain High Amid Supply Crunch

Indian refiners have continued to purchase large quantities of Russian crude oil in the last two months, with no signs of slowing down in the coming months. The country's reliance on Russian oil has increased significantly since the invasion of Ukraine in 2022, and it is expected to continue this trend due to a Middle East supply crunch and the threat of US sanctions fading.

According to data from intelligence firm Kpler, Indian imports from Russia averaged 1.98 million barrels a day in March, the highest since June 2023. Although this figure dipped to an average of 1.57 million barrels a day in April, due to the maintenance shutdown of Nayara Energy's 400,000 barrel-a-day refinery, volumes are expected to pick up again from next month.

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The world's third-largest oil importer, India, has become the largest seaborne buyer of Russian crude, as it seeks to maximize its intake while Persian Gulf supplies remain crimped. The country's decision to purchase Russian oil is driven by discounted prices, which have become more attractive compared to other suppliers.

The US and Israeli strikes on Iran and the subsequent closure of the Strait of Hormuz have further changed the calculus for all sides. Washington is eager to dampen oil prices, while India is rushing to secure supply. A first waiver allowing Russian oil purchases was issued in early March, and that has already been widened and extended.

After the first waiver, India bought about 60 million barrels for delivery this month. Russian crude had been building up on water in the later half of last year, as India stayed away for fear of incurring more oprobrium and tariffs from Washington. Volumes reached a peak in early January at around 155 million barrels, compared to around 93.2 million in the middle of last year.

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The US Treasury has also issued a waiver allowing temporary access to seaborne Iranian oil, and India has said publicly that it will take Iranian crude as one of its options. However, refiners report limited success when turning to those alternatives, in part because of concerns over suppliers and other intermediaries.

India's reliance on Russian oil has significant implications for the country's energy security, as it imports about 90% of its crude and depends on flows through the Hormuz Strait. The country has faced shortages, surging prices, and the prospect of slower growth since the six-week war in the Persian Gulf began.