Russia Steps In as Hormuz Shuts, How India’s Rapid Ramp-Up of Russian Oil Is Cushioning the West Asia Supply Shock
With the Strait of Hormuz effectively shut for oil tankers since early March, the global energy market has been thrown into turmoil. For India, the world’s third-largest oil importer, this disruption could have been catastrophic. The country depends on imports to meet over 88 per cent of its crude oil needs. About 2.5 to 2.7 million barrels per day (bpd) of India’s crude imports—roughly half of its overall oil imports—have transited the Strait of Hormuz in recent months. This oil is mainly from Iraq, Saudi Arabia, the UAE, and Kuwait, all of which have seen their exports to India crash this month.
Yet, the feared supply shock has been significantly cushioned. The reason is India’s rapid ramp-up of Russian oil imports. In March, Russian oil imports are nearing historic peaks, and a similar trend is expected in April, according to tanker data and industry insiders. The speed of the rebound has been remarkable. As Middle Eastern supplies via Hormuz dried up, Indian refiners were able to lift Russian purchases by close to 0.8 to 1.0 million bpd, helping cushion the disruption without materially affecting refinery runs so far.
The numbers tell the story. Crude oil imports from Iraq and the UAE so far in March have crashed 69.2 per cent and 72.8 per cent, respectively, on a month-on-month basis. Imports from Saudi Arabia and Kuwait are down 45.1 per cent and 45.8 per cent, respectively, according to vessel tracking data from commodity market analytics firm Kpler. On the other hand, oil imports from Russia have jumped by 82.3 per cent from February levels to 1.9 million bpd in the March 1-25 period. So far in March, Russia’s share in India’s oil imports stands at 45.2 per cent, up from 20.1 per cent in February.
India’s highest monthly procurement of Russian crude since the start of the Russia-Ukraine war was in the 2 to 2.1 million bpd range. This month, it could reach 2 million bpd. “In historical context, India’s highest monthly procurement of Russian crude since the start of the Russia-Ukraine war was in the around 2-2.1 million bpd range. The current surge is therefore approaching prior peaks, though not materially exceeding them at this stage. What stands out is the speed of the rebound: as Middle Eastern supplies via Hormuz dried up, Indian refiners were able to lift Russian purchases by close to 0.8-1.0 million bpd, helping cushion the disruption without materially affecting refinery runs so far,” said Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler.
The shift is all the more remarkable because India had, in recent months, significantly cut down on its oil imports from Russia. This was in the context of trade negotiations with the United States, as Washington had made it a prerequisite for scrapping its 25 per cent additional penal tariff on New Delhi. The US had been pressuring India to reduce its dependence on Russian oil, a key source of revenue for Moscow as it continues its war in Ukraine. The message from Washington was clear: closer trade ties with the US meant less oil from Russia.
But with the Strait of Hormuz closed for all intended purposes, Washington’s calculus has shifted. The US has now given a 30-day waiver for refiners to purchase Russian oil. The administration is now more than happy with India, as well as other importers, consuming more Russian crude, even from sanctioned entities and tankers. The strategic imperative of keeping global oil markets stable and preventing a price spike that would hurt American consumers has temporarily overridden the geopolitical imperative of isolating Russia.
The current disruption is a stark reminder of India’s vulnerability to geopolitical shocks. The country’s dependence on imported oil has been a long-standing structural weakness, one that successive governments have promised to address. In the 12 years of the Modi government, domestic crude oil output has fallen, and import dependence has risen from 84 per cent in 2014-15 to over 88 per cent today. The window of relatively benign oil prices that could have been used to reduce this dependence was not fully exploited. Now, with prices high and supply lines disrupted, the cost of that missed opportunity is being paid.
Yet, the crisis has also demonstrated the resilience of India’s refining and trading ecosystem. The ability to rapidly pivot from Middle Eastern suppliers to Russian ones, to reconfigure supply chains in a matter of weeks, is not something that happens by accident. It is the result of years of investment in refining capacity, of relationships built with a diverse set of suppliers, and of a trading culture that is both sophisticated and flexible. The Indian private sector, in particular, has shown an ability to navigate complex geopolitical waters, sourcing oil from wherever it is available and cost-effective.
The surge in Russian oil imports has not yet been enough to fully compensate for the loss of Middle Eastern supplies. Overall, India’s total crude imports are currently down by about 800,000 bpd compared to January-February levels, or pre-conflict levels. However, this has not yet materially impacted refinery runs, which remain broadly stable. Refiners have drawn down commercial inventories to sustain throughput, while product exports continue to track near historical norms. The system is managing, but it is managing on the edge.
Looking ahead, Russian crude is expected to remain the backbone of India’s import slate, at least for as long as the Strait of Hormuz remains closed and US sanctions waivers remain in place. The war in West Asia has fundamentally altered the calculus of energy security. The old assumptions—that the Strait of Hormuz would remain open, that Middle Eastern supplies would be reliable, that the US would prioritize isolating Russia over keeping global oil prices stable—have all been shaken. The new reality is one of greater uncertainty, and in that uncertainty, the ability to pivot quickly between suppliers is a strategic asset.
For India, the immediate task is to keep the refineries running and the fuel flowing. The government has already taken steps to prioritize household LPG needs over industrial use, to promote PNG as an alternative, and to secure gas cargoes from diverse sources. The Ministry of Petroleum and Natural Gas has been in constant touch with refiners, monitoring the situation and coordinating responses. The Reserve Bank of India has been managing the external sector, watching the current account deficit and the rupee.
But the long-term task is more fundamental. India must reduce its dependence on imported oil. That means accelerating the transition to renewable energy, promoting electric vehicles, and improving energy efficiency across the economy. It means investing in domestic exploration and production, even when prices are low and the returns are uncertain. It means building strategic petroleum reserves that can cushion shocks of this kind. The window of opportunity that was missed over the past decade cannot be reopened, but the lessons of this crisis must be learned.
The war in West Asia will end, eventually. The Strait of Hormuz will reopen. The global oil market will find a new equilibrium. But the vulnerabilities that this crisis has exposed will remain. India’s energy security cannot depend on the willingness of the US to grant waivers, or on the ability of the Iranian navy to distinguish between Indian and Western tankers. It cannot depend on the speed with which Russian oil can be rerouted. It must depend on a strategy that reduces demand, diversifies supply, and builds resilience. The current crisis is a warning. It is also an opportunity.
Questions and Answers
Q1: How have India’s crude oil imports from West Asian suppliers been affected by the closure of the Strait of Hormuz?
A1: Imports from key West Asian suppliers have crashed significantly in March. According to vessel tracking data, imports from Iraq fell 69.2%, from the UAE fell 72.8%, from Saudi Arabia fell 45.1%, and from Kuwait fell 45.8% compared to February levels. This disruption affects about half of India’s total oil imports.
Q2: How has India responded to this supply shock, and what has been the impact on Russian oil imports?
A2: India has rapidly ramped up Russian oil imports to cushion the supply shock. Russian oil imports jumped by 82.3% from February levels to 1.9 million bpd in March, with Russia’s share in India’s oil imports rising from 20.1% in February to 45.2% in March. This surge is approaching historic peaks of 2-2.1 million bpd seen during the Russia-Ukraine war.
Q3: Why had India reduced its Russian oil imports in recent months, and why has the US now allowed a waiver?
A3: India had reduced Russian oil imports in the context of trade negotiations with the US, which made it a prerequisite for scrapping its 25% additional penal tariff. However, with the Strait of Hormuz closed, the US has now granted a 30-day waiver for refiners to purchase Russian oil. The strategic imperative of preventing a global oil price spike has temporarily overridden the geopolitical goal of isolating Russia.
Q4: Has the surge in Russian oil fully compensated for the loss of Middle Eastern supplies?
A4: Not fully. Overall, India’s total crude imports are currently down by about 800,000 bpd compared to pre-conflict levels. However, refiners have drawn down commercial inventories to sustain throughput, and refinery runs remain broadly stable. The system is managing but operating on the edge.
Q5: What long-term lessons does this crisis hold for India’s energy security strategy?
A5: The crisis highlights India’s persistent vulnerability to imported oil dependence. Despite 12 years of relatively benign oil prices, domestic crude output has fallen and import dependence has risen. Long-term solutions include accelerating renewable energy transition, promoting electric vehicles, improving energy efficiency, investing in domestic exploration, and building strategic petroleum reserves to cushion future shocks. The window of opportunity that was missed cannot be reopened, but the lessons of this crisis must be learned.
