Iran situation impact: Indian refiners turn their attention to Russian oil again

The Iran crisis has nearly disrupted the passage through the Strait of Hormuz, and India is facing severe oil supply pressure. As the world's third largest oil importer, India is now turning its attention back to Russian crude, which it had previously significantly reduced under US pressure.

According to media reports on Monday, government officials and state-owned refiners in India held emergency meetings last weekend to develop contingency plans for the Strait of Hormuz crisis. According to insiders, one option India is considering is purchasing Russian crude cargoes currently stranded in nearby waters—by last weekend, about 9.5 million barrels of Russian oil were anchored in Asian waters.

According to previous reports by CCTV News, Russian Presidential Press Secretary Peskov stated on February 3 that Russia has not received any information from India indicating it would stop purchasing Russian oil.

The urgency of this crisis lies in the fact that about 2.5 to 2.7 million barrels of India’s daily crude oil imports must pass through the Strait of Hormuz, making up about half of its total oil imports. Officials from the Ministry of Petroleum said India's commercial and strategic reserves combined would last only about two weeks, and the situation is troubling.

Russian Oil Purchases at a Low, Crisis Forces Reassessment

India’s relationship with Russian oil has undergone significant changes recently. After the outbreak of the Russia-Ukraine conflict, India became the most important single buyer of Russian seaborne oil. However, under US pressure—especially after the two countries reached a trade agreement and the US rolled back punitive tariffs last month—India drastically cut its imports from Russia.

Data shows India imported just over 1 million barrels per day of Russian oil in February this year, about half of its peak volume and the lowest level since September 2022. Most of the resulting shortfall has been filled by Middle Eastern oil.

Now, the Strait of Hormuz crisis has hindered this alternative, and India is forced to reassess the strategic value of Russian oil. According to insiders, officials from the Ministry of Petroleum are urging the Ministry of Foreign Affairs to seek some policy flexibility from Washington, so that India can resume some Russian oil imports without crossing US red lines.

Multi-Pronged Approach, Contingency Plans Taking Shape

Besides Russian crude, India is also assessing several other backup options. Citing insiders, media reports indicate these include: tapping India’s strategic oil reserves, accelerating Venezuelan supply, urging domestic producers to boost output, and requesting Saudi Aramco to send more crude to the Red Sea port of Yanbu via pipeline, thereby bypassing the Strait of Hormuz.

If the crisis persists, the government may take more proactive measures—restricting exports of refined oil products to ensure domestic supply, prioritizing residential gas and pipeline supply, and requiring industrial users to switch fuels.

Officials might also pressure private giant Reliance Industries to allocate more fuel to the domestic market, and guide other refiners to adjust production structures, maximizing LPG output even at the expense of products like naphtha.

Weak Strategic Reserves Highlight Supply Vulnerability

This crisis has also exposed deep-seated flaws in India's energy security. Last month, Oil Minister Hardeep Puri told lawmakers India’s strategic oil reserves total about 30 million barrels, equivalent to only six days of consumption, and the reserves are limited to crude oil—not including LPG or LNG. Nearly two-thirds of India’s LNG imports and about 95% of LPG supplies come from the Middle East, most of them must pass through the critical Strait of Hormuz.

The enormous demand, combined with limited strategic buffers, makes India particularly vulnerable amid ongoing Middle East turmoil. How to balance geopolitical pressures with energy security will be the core challenge for the Indian government in this crisis.

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