Key facts
- India's crude oil inventories reached 104 million barrels in June, near a one-year high.
- Total crude oil imports hit a record 5 million barrels per day in June.
- Russian crude accounted for a record 2.6 million bpd, or 54% of India's total imports.
- Disruptions in the Strait of Hormuz led to reduced Middle Eastern crude supplies.
- Indian refiners increased Russian crude purchases to compensate for lost Gulf supplies.
India's crude oil inventories climbed to a near one-year high of 104 million barrels in June, a level not seen since before the escalation of tensions in the Strait of Hormuz. This surge was primarily driven by record crude oil imports, which reached approximately 5 million barrels per day for the month. A significant portion of these imports, a historic 2.6 million barrels per day, originated from Russia, accounting for 54% of India's total crude intake.
The increased reliance on Russian crude is a direct response to supply disruptions from the Persian Gulf. Following the closure of the Strait of Hormuz, traditional suppliers like Iraq and Saudi Arabia saw their exports to India drastically reduced. While the UAE managed to maintain a steady supply, it was not enough to fill the entire gap. The situation was exacerbated by pricing dynamics, with Saudi term barrels becoming less competitive.
Russian supplies, which had previously fallen due to sanctions pressure, more than doubled in four months to fill the void. This shift was facilitated by lower Russian refinery runs, partly due to Ukrainian strikes, and a slowdown in Chinese demand for crude. Indian refiners, including Indian Oil Corporation and Reliance Industries, significantly increased their purchases of Russian oil.
As traffic through the Strait of Hormuz begins to recover following a recent ceasefire, Middle Eastern suppliers are attempting to regain market share by offering discounts and de-risking shipments. However, Russian crude is viewed as a secure and established supply route for India, and its role in the import mix is expected to remain elevated, serving as an insurance policy against future disruptions. The economics of sourcing are shifting, with discounted Middle Eastern barrels becoming more accessible, potentially forcing Russian exporters to adjust their pricing strategies.