New Delhi: Indian oil refiners are diving back into the market for Russian crude. With over 15 million barrels stuck on tankers nearby, they aim to tackle supply issues caused by rising tensions in the Middle East. This renewed interest came after the U.S. Treasury granted a 30-day license for India to buy Russian oil currently stranded at sea.
Previously, India’s purchases had plummeted due to pressure from the U.S. to curb imports and limit financial support to Russia amid its ongoing conflict in Ukraine. In February, imports dropped to just over 1 million barrels a day, the lowest since late 2022.
With the conflict in the Middle East affecting oil supplies from the region, Indian refiners are adjusting their strategies. Historically, India had ramped up its intake of discounted Russian oil after Western sanctions took effect in February 2022, even hitting a peak of 2.15 million barrels per day in May 2023.
Now, as issues in the Strait of Hormuz create more uncertainty, refiners are balancing their purchases between Russian oil at sea and other sources. “This situation helps us secure a stable domestic fuel supply,” said economist Sumit Ritolia from Kpler. He noted that with nearly half of India’s crude imports coming from the Middle East, the country remains vulnerable to disruptions in that supply.
The U.S. sees India’s role as crucial in the global oil market. Scott Bessent, U.S. Treasury Secretary, highlighted that this temporary waiver was meant to ensure oil continues flowing into global markets while allowing India to bolster its stock. However, he reminded that this would not have a huge impact on Russian finances, as the waiver only applies to oil currently stranded.
Currently, there are multiple tankers loaded with Russian oil in the Arabian Sea and Bay of Bengal, with more on their way. These inventories could help satisfy India’s needs, especially as they currently have enough oil to meet 25 days of demand.
Experts believe that the renewed access to Russian oil will enhance feedstock security for Indian refiners, but it’s unlikely to lead to immediate increases in product exports. The focus will remain on meeting domestic fuel requirements first.
While this situation offers a short-term solution, India’s dependency on Middle Eastern oil highlights the need for diversification in its crude sources to maintain stability. As recent trends show, the race for Russian crude is ongoing, with competition from other countries like China complicating matters.
In summary, while Indian refiners are poised to increase purchases of Russian oil, their long-term strategy should also focus on securing a more varied supply to safeguard against future disruptions.
For further insights, you can read more on Kpler’s analysis of global oil markets.
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