India taps alternative crude supplies as conflict in West Asia drags on

India taps alternative crude supplies as conflict in West Asia drags on

Refiners are looking to procure additional cargoes from the U.S., Russia and West Africa to shore up their supplies; refineries have deferred planned maintenance shutdowns to create buffers; analysts warn of rising cost structure of the alternatives

Indian refiners have begun negotiating for additional crude cargoes from the U.S., Russia and West Africa to ensure supplies remain adequate in the event the West Asia conflict drags on for a longer period, industry officials and analysts said.

Refineries, which convert crude oil into fuels such as petrol and diesel, have deferred planned maintenance shutdowns and are maintaining normal processing rates to create buffers to meet the country’s requirement in the near term, they said.

India imports about 88% of its crude oil requirement, with roughly half of those supplies in February passing through the Strait of Hormuz, the narrow sea lane between Iran and Oman that serves as a key energy transit route for global markets.

The recent military strikes by the U.S. and Israel on Iran, and Tehran’s retaliatory attacks on U.S. bases in neighbouring countries as well as Israel, have sharply escalated tensions in the region, leading to a near halt in tanker movements through the strategic waterway.

“Non-strait sources are fully operational and we are sourcing more and more supplies from non-conflict zones,” a top oil Ministry source said. “Non-strait sources accounted for 60% of supplies in 2025, which — after the Middle East conflict — climbed to 70%.”

Indian refiners are tapping crude from West Africa, Latin America and the U.S., he said, adding that the U.S. Treasury Department issuing a 30-day waiver to allow the sale and delivery of sanctioned Russian oil that has already been loaded on vessels to India has opened up another avenue.

The waiver permits the sale, delivery or discharge of crude oil and petroleum products of Russian origin that were loaded onto vessels on or before March 5, including ships subject to certain sanctions. The exemption remains valid until April 5, allowing cargoes already in transit to be completed without violating sanctions restrictions.

There are 120 million barrels of Russian crude on the water. Of this, as many as 15 million barrels of Russia-origin crude are sitting on tankers close to India — in the Arabian Sea and Bay of Bengal — while another 7 million Russian crude barrels are idling near Singapore.

Industry sources said Indian refiners have started buying Russian oil. Reliance Industries, Hindustan Petroleum Corporation Ltd., and HPCL-Mittal Energy Ltd. have returned to the market to secure Russian cargoes, they said.

The Oil Ministry official said India never stopped buying Russian oil — it imported some 1.04 million bpd (barrels per day) of Russian crude in February. “We are in a very comfortable position as far as crude and finished products are concerned,” he said, adding the combined inventory can meet the country’s demand for 50 days.

Challenges ahead

While India may be able to secure adequate physical crude through alternative sources, analysts cautioned that the overall cost structure could worsen due to higher crude prices, increased freight and insurance premiums, and longer shipping routes.

International crude oil prices have jumped to over ₹92 per barrel from around ₹70 when the U.S. and Israel attacked Iran on February 28. Liquefied natural gas (LNG) prices have more than doubled to ₹24-25 per million British thermal unit.

Every ₹10 increase in crude prices could add 20-25 basis points to the consumer price index if passed on to consumers, or widen the fiscal deficit if taxes are cut to neutralise the impact. The immediate impact will be a higher import bill, a widening current account deficit and pressure on the rupee.