India Halts Iraqi Oil Imports Amid Strait of Hormuz Security Concerns

• India's largest state refiners, Indian Oil Corp. and Mangalore Refinery & Petrochemicals, have halted crude oil loadings from Iraq.
• The decision stems from increased security risks and costs in the Strait of Hormuz due to attacks on commercial tankers.
• Indian refiners are responsible for arranging shipping for Iraqi oil under long-term contracts.
• India relies on imports for over 85% of its oil consumption.
• The move prompts India to further seek alternative supplies, with Russian crude imports remaining high.

India's major state-owned oil refiners, Indian Oil Corp. and Mangalore Refinery & Petrochemicals, have suspended taking crude oil shipments from Iraq. This decision reflects a growing reluctance to navigate the Strait of Hormuz, a critical global oil chokepoint, due to a recent spate of attacks on commercial tankers. The increased danger and associated costs have made the transit too risky for these refiners, who are responsible for arranging their own shipping under long-term contracts with Iraq.

Before recent escalations, Iraq was a significant supplier to India, which imports over 85% of its oil needs. The current security situation effectively strands a portion of Middle Eastern supply, as Iraq lacks alternative export routes. This pullback is accelerating India's efforts to secure oil from other sources, with imports from Russia remaining robust. Supplies from the UAE and Saudi Arabia are also seen as more resilient due to their ability to bypass Hormuz via pipelines.

The situation is occurring as Brent crude prices have surpassed $90 per barrel, influenced by ongoing tanker attacks and a Houthi blockade targeting shipping in the Red Sea. While India currently has sufficient crude reserves, a sustained buyer aversion to Iraqi oil due to transit risks could further impact global supply dynamics.