New Delhi: Indian state-owned oil refiners are facing growing uncertainty over future crude supplies as disruptions caused by the Middle East conflict coincide with the possibility of tighter US restrictions on countries purchasing Russian oil.
India has relied on discounted Russian crude and relatively stable supply agreements with Middle Eastern producers to control import expenses in recent months. However, disruptions to established supply routes and increasing sanctions risks are forcing refiners to reconsider their purchasing strategies.
Oil shipments through the Strait of Hormuz have faced disruptions since late February. Saudi Arabia also recently suspended operations along a key section of its East-West pipeline following drone attacks, affecting more than 400,000 barrels per day of supplies destined for India.
Although Saudi Arabia is working to repair the damaged infrastructure and restore part of the pipeline’s capacity, uncertainty surrounding Russian crude presents a more prolonged challenge for Indian buyers.
The United States has moved towards expanding sanctions-related tariff powers against countries conducting business with Russia’s oil industry. If these measures are implemented more aggressively, Indian refiners could face additional financial and logistical complications while securing Russian supplies.
According to industry sources, refiners have already secured their crude requirements for September and October. However, purchases for November and subsequent months are becoming more difficult, with companies assessing the risks associated with different suppliers and shipping routes.
India remains the largest buyer of Russian seaborne crude, but refiners have increasingly diversified their purchases by sourcing oil from the United States, Brazil, Canada, Venezuela and African producers. Such diversification could increase procurement costs.
India’s crude inventories stood at approximately 93.5 million barrels during the week beginning September 14, their lowest level since May. Current stocks are estimated to cover around 20 days of imports.
Meanwhile, additional refining capacity is expected to increase demand for crude. A new 180,000-barrel-per-day refinery in Rajasthan is being ramped up, while Indian Oil Corporation is expanding existing facilities, adding more than 340,000 barrels per day by December.
