Iranian situation shocks, Indian refiners are once again eyeing Russian oil

The Iran crisis has nearly halted the Strait of Hormuz passage, putting India under severe oil supply pressure. As the world’s third-largest oil importer, India is refocusing on Russian crude oil, which it previously reduced significantly due to U.S. pressure.

On Monday, media reports said that India’s state refineries and government officials held an emergency meeting last weekend to discuss contingency plans for the Hormuz Strait crisis. According to insiders, one option India is considering is purchasing Russian oil tankers currently stranded in nearby waters — as of last weekend, about 9.5 million barrels of Russian oil were anchored in Asian waters.

Previously, CCTV News reported that Russian Presidential Press Secretary Peskov stated on February 3rd that Russia had not received any information about India ceasing to buy Russian oil.

The urgency of this crisis lies in the fact that India imports about 2.5 to 2.7 million barrels of crude oil daily via the Strait of Hormuz, accounting for roughly half of its total oil imports. Oil officials say that India’s combined commercial and strategic reserves can only sustain about two weeks of supply, making the situation quite dire.

Russian Oil Purchases Hit Low, Crisis Forcing Reassessment

India’s relationship with Russian oil has recently undergone a significant shift. After the Russia-Ukraine conflict broke out, India was once Russia’s most important single buyer of seaborne crude oil. However, under U.S. pressure — especially after a trade agreement was reached last month and the U.S. withdrew punitive tariffs — India sharply reduced its purchases of Russian oil.

Data shows that in February, India’s crude oil imports from Russia averaged just over 1 million barrels per day, about half of the peak levels and the lowest since September 2022. The resulting gap has been mainly filled by Middle Eastern oil.

Now, with the Hormuz Strait crisis blocking this alternative source, India is forced to reassess the strategic value of Russian crude. Insiders say that Petroleum Ministry officials are pushing the Foreign Ministry to seek some policy flexibility from Washington to resume part of the Russian oil purchases without crossing U.S. red lines.

Multiple Measures, Contingency Plans Taking Shape

In addition to Russian oil, India is evaluating several alternative options. According to media reports citing insiders, these include: utilizing India’s strategic petroleum reserves, accelerating supplies from Venezuela, encouraging domestic producers to increase output, and requesting Saudi Aramco to transport more crude via pipelines to the Red Sea port of Yanbu to bypass the Strait of Hormuz.

If the crisis persists, the government may also take more proactive measures — restricting refined oil exports to ensure domestic supply, prioritizing supplies for residents and pipeline deliveries, and urging industrial users to switch fuels.

Officials may also pressure private giants like Reliance Industries to supply more fuel to the domestic market, while guiding other refineries to adjust production structures, possibly sacrificing products like naphtha to maximize LPG output.

Weak Strategic Reserves, Supply Vulnerability Exposed

This crisis has also revealed deep vulnerabilities in India’s energy security. Oil Minister Hardeep Puri told lawmakers last month that India’s strategic petroleum reserves are about 30 million barrels, enough for only around six days of consumption, and that these reserves are limited to crude oil, excluding LPG or LNG. Nearly two-thirds of India’s LNG imports and about 95% of LPG supplies come from the Middle East, most of which transit through the critical Strait of Hormuz.

The large demand volume combined with limited strategic buffers makes India particularly vulnerable amid ongoing turmoil in the Middle East. Balancing geopolitical pressures with energy security will be a key challenge for the Indian government during this crisis.

Risk Warning and Disclaimer

Market risks exist; investments should be made cautiously. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions herein are suitable for their particular circumstances. Investment is at your own risk.