India considers returning to Russian oil due to crisis surrounding Iran

Indian state-owned oil refiners and government officials held a meeting over the weekend to discuss plans to respond to the crisis in Iran, which has nearly halted oil shipments through the Strait of Hormuz. This narrow sea route is critical for about half of the country's oil imports, according to Bloomberg.

According to people familiar with the talks, India is considering turning to Russian cargoes currently located near its waters. After the start of the full-scale war in Ukraine, India became the largest buyer of Russian seaborne oil, but has recently reduced its purchases under pressure from the United States, particularly after signing a trade agreement with the United States last month that provided for the removal of punitive tariffs.

In February, India imported just over 1 million barrels of Russian oil per day, which is about half of the peak level and the lowest since September 2022. The shortfall was mainly offset by supplies from the Middle East.

Oil ministry officials said that existing commercial and government stocks could cover up to two weeks of demand. At the same time, they are calling on the Foreign Ministry to ask Washington for more room for manoeuvre. As of the end of last week, there were 9.5 million barrels of Russian oil in Asian waters.

In a statement on Monday, India's Ministry of Petroleum said it was continuing to monitor the situation and that "all steps will be taken to ensure the availability and affordability of essential petroleum products in the country."

Other possible measures under consideration include using the strategic oil reserve, speeding up supplies from Venezuela and increasing domestic production. There is also talk of increasing Saudi oil supplies via pipeline to the port of Yanbu on the Red Sea, which would bypass the Strait of Hormuz.

If the crisis drags on, the government may consider restricting fuel exports to meet domestic needs. It may also prioritise gas supplies to households and pipeline networks, and industrial consumers may be offered the option of switching to alternative fuels.

India continues to fill its strategic oil reserve, but its volume is significantly smaller than China's. Oil Minister Hardeep Puri said last month that the country has about 30 million barrels of reserves, equivalent to about six days of consumption. These reserves are for crude oil only and do not include liquefied petroleum gas or liquefied natural gas.

According to Kpler, between 2.5 and 2.7 million barrels of oil destined for India pass through the Strait of Hormuz every day. The country receives nearly two-thirds of its LNG supplies and about 95 per cent of its LPG from the Middle East, mainly through this strait.