Indian Refiners Reconsider Russian Oil Amid Iranian Supply Disruption

Indian Oil Import Crisis: Contingency Plans Unfurl

Key Figures:

• 9.5 million barrels: Russian oil sitting in Asian waters as of late last week
• 1 million barrels a day: India's current Russian oil imports, a significant reduction from peak levels
• 2.5 million to 2.7 million barrels a day: India-bound crude passing through the Strait of Hormuz
• 30 million barrels: India's strategic oil reserve, equivalent to roughly six days of consumption

India's Oil Import Dilemma

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Indian state refiners and government officials met over the weekend to discuss contingency plans in case of a prolonged crisis in Iran that has severely impacted oil flows through the Strait of Hormuz. The country, the world's third-largest oil importer, is exploring alternative options, including tapping into Russian oil cargoes currently near its waters.

Russian Oil Imports: A Changing Landscape

India has been reducing its Russian oil imports in response to US pressure, particularly after a trade deal rolled back punitive tariffs last month. However, the country still has 9.5 million barrels of Russian oil sitting in Asian waters, which could serve as a backup option.

Alternative Solutions

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To mitigate the crisis, India's oil ministry is pushing for the Ministry of External Affairs to seek flexibility from Washington. Other alternatives being considered include tapping into the country's strategic petroleum reserve, fast-tracking supplies from Venezuela, and increasing domestic production.

Strategic Petroleum Reserve: A Limited Option

India's strategic oil reserve holds 30 million barrels, equivalent to roughly six days of consumption. However, the stockpile remains modest compared to China's, leaving the country vulnerable to a drawn-out war in the Middle East.

Potential Consequences

In the event of a prolonged crisis, the government may consider curtailing fuel exports to secure enough supply for domestic consumers. This could involve prioritizing household gas and piped supplies, while directing industrial users to switch to alternative fuels.

Middle East Dependence

India's dependence on Middle Eastern oil and gas supplies makes it particularly vulnerable to a crisis in the region. Nearly two-thirds of LNG shipments and about 95% of LPG supplies come from the Middle East, mostly through the Strait of Hormuz.