India Seeks Diversification of Energy Supplies Amid Strait of Hormuz Disruption

India Prepares for Potential Middle East Conflict Disruption

Overview India is taking proactive measures to secure alternative sources for importing crude oil, liquefied petroleum gas (LPG), and liquefied natural gas (LNG) in anticipation of a prolonged conflict in the Middle East. According to a government source, India's refiners process approximately 5.6 million barrels per day of crude oil, with around 40% of their imports passing through the Strait of Hormuz.

Inventory Levels India's government is reasonably confident in its ability to adapt to disruptions in the Strait of Hormuz, citing sufficient crude oil inventories to meet demand for approximately 25 days. Additionally, refiners hold equivalent inventory levels of gasoil, gasoline, and LPG. However, the country's natural gas supply position is more precarious, with only a few days of LNG supplies remaining after Qatar halted production on Monday, February 27.

Short-Term Measures To mitigate the impact of potential disruptions, Indian companies have reduced gas supplies to some industrial customers since Monday, February 27. The source also mentioned that if Qatar does not resume LNG production in the next few days, India may need to explore alternative suppliers and take additional measures.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Russian Oil Purchases The government source did not comment on whether Indian refiners would increase purchases of Russian oil. In recent months, Indian refiners curtailed purchases of Russian oil to avoid punitive tariffs imposed by President Donald Trump and to facilitate an interim trade deal with Washington.