The US military targeted three sites in Iran early Sunday (June 22), joining Israel, which initially struck Iranian nuclear facilities on June 13.
Indian refineries are expected to bring in 2-2.2 million barrels per day of Russian crude oil in June, marking the highest figures in two years and exceeding the total volumes acquired from Iraq, Saudi Arabia, the UAE, and Kuwait, according to preliminary data from global trade analytics firm Kpler.
India’s oil imports from Russia in May stood at 1.96 million barrels per day (bpd). Imports from the United States also surged to 439,000 bpd in June, a significant rise from the 280,000 bpd acquired the previous month.
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Full-month predictions for imports from the Middle East are around 2 million bpd, which is lower than the volumes purchased the month prior, as reported by Kpler. As the world’s third-largest oil-importing and consuming nation, India sourced approximately 5.1 million barrels of crude oil from international markets, converting it into fuels like petrol and diesel at its refineries.
Traditionally relying on the Middle East for oil, India started importing substantial amounts from Russia shortly after the invasion of Ukraine in February 2022. This shift occurred mainly because Russian oil was available at a considerable discount compared to other global prices due to Western sanctions and the withdrawal of some European buyers.
This surge has seen Russian oil imports grow from less than 1 percent of India’s total crude oil imports to an astonishing 40-44% within a short timeframe. So far, the ongoing conflict in the Middle East has not disrupted oil supplies.
“While supplies have remained unaffected up to this point, vessel activities indicate a decrease in crude loadings from the Middle East in the upcoming days,” said Sumit Ritolia, Lead Research Analyst for Refining & Modeling at Kpler, in an interview with PTI.
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“Shipowners are reluctant to send empty tankers (ballasters) into the Gulf; the number of such vessels has dropped from 69 to just 40, and signals from the Gulf of Oman heading toward the Middle East have reduced by half.” This trend indicates a potential tightening of current MEG supplies, which could lead to adjustments in India’s sourcing strategy, he noted.
The Strait of Hormuz, situated between Iran in the north and Oman and the UAE in the south, serves as the primary route for oil exports from Saudi Arabia, Iran, Iraq, Kuwait, and the UAE. Numerous liquefied natural gas (LNG) shipments, especially from Qatar, also pass through the strait.
As military tensions escalate between Israel and Iran, Tehran has issued threats to close the Strait of Hormuz, a crucial transit point for a fifth of the world’s oil and significant LNG exports. India sources about 40% of its oil and around half of its gas through this narrow passage.
Kpler has noted that concerns over a potential closure of the Strait of Hormuz have intensified following Israel’s pre-emptive strikes on Iranian military and nuclear sites. Iranian hardliners have suggested closure, warning state media that oil prices could skyrocket to $400 per barrel.
“However, Kpler analysis assigns a very low probability to a full blockade, citing strong disincentives for Iran,” Ritolia stated. China, Iran’s largest oil consumer (importing 47% of its seaborne crude from the Middle East Gulf), would be directly affected. Furthermore, Iran’s dependence on the Strait for oil exports through Kharg Island (which processes 96% of its exports) makes a self-imposed blockade counterproductive.
Moreover, Tehran has been working over the past two years to strengthen ties with key regional players, including Saudi Arabia and the UAE, both of which are heavily reliant on the Strait for exports and have openly criticized Israel’s actions. Disrupting their exports would jeopardize those diplomatic advances.
A closure would likely invite international military responses. Any increase in Iranian naval presence would be easily detected, likely prompting a preemptive reaction from US and allied forces. In the worst-case scenario, isolated sabotage efforts might disrupt oil flows for 24-48 hours, the expected time needed for US forces to neutralize Iran’s conventional naval capabilities, according to Kpler.
Such an action would spark military retaliation and diplomatic tensions with Oman, undermining Iran’s own covert channels with the US. Ritolia noted that India’s import strategy has significantly evolved over the past two years.
Russian oil (Urals, ESPO, Sokol) is logistically independent from Hormuz, transported via the Suez Canal, Cape of Good Hope, or the Pacific Ocean. Indian refiners have developed flexibility in refining and payment processes while optimizing operations for a diverse range of crude sources. Even while flows from the US, West Africa, and Latin America are more costly, they are increasingly seen as viable backup options.
“India’s June shipments from Russia and the US underscore this adaptive strategy,” he remarked. “If the conflict escalates or if there is a short-term disruption in Hormuz, Russian oil’s share will likely increase, providing both availability and price relief. India may pivot more toward the US, Nigeria, Angola, and Brazil, although at higher freight costs.
Additionally, India might draw on its strategic reserves (equivalent to 9-10 days of imports) to cover any shortfalls.
